Blockchain Based Trade Finance Solution Launched By R3 Consortium
R3, an enterprise software firm, TradeIX, the world’s first open platform for trade finance, and major banks have partnered together to launch a blockchain based trade finance solution. The piloting of the project follows a successful proof-of-concept.
The initiative, nicknamed Marco Polo, was launched in September 2017, with BNP, ING, and Commerzbank as core banks. In the months that followed, Standard Chartered, OP Financial Group and DNB joined the alliance. Powered by the TiX platform from TradeIX and R3 Corda blockchain technology, a solution for post shipment trade financing has been developed. The technology allows end to end, real time, seamless connectivity between trade participants.
The facility also eliminates the data silos, which prevent free flow of information causing inefficiencies and discrepancies. Initially, the pilot project will offer solutions for risk mitigation by provision of payment commitments based on the matching of trade data, payables finance, and receivables finance. TradeIX’s TIX platform will deliver the solutions.
Going forward, there are plans to include additional banks, and third party service providers such as credit insurers, ERP and logistics providers. By leveraging the collaborative nature of the platform, a full interoperable open sourced trade finance network is planned to be created. Notably, the trade finance market is estimated to be $8 trillion.
TradeIX’s TIX platform offers applications, technology tools, and core infrastructure for the trade finance ecosystem. The TIX platform enables trade finance parties to more easily, flexibly, and efficiently connect to the broader trade finance market, including suppliers, buyers, service providers, B2B networks, credit underwriters and financial institutions. The platform provides benefits to all trade finance parties through enhanced funding opportunities, lower cost and reduced risk.
The enterprise software firm works with over 200 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to develop on Corda, its distributed ledger platform designed specifically for businesses. Corda is the outcome of two years of intense research and development by R3 and its members and meets the highest standards of the banking industry, yet is applicable to any commercial scenario.
Commenting on the piloting of trade finance solution, Jacques Levet, Head of Transaction Banking EMEA BNP Paribas, said
“We see the proof of concept as an important milestone in this project. The fact that more banks have joined also illustrates the interest in this project and in the potential of DLT in supply chain finance solutions.”
Michael Vrontamitis, Head of Trade, Europe & Americas, Standard Chartered, said
“The age of digital collaboration in trade finance has arrived and we see our participation in this initiative as an important component to accelerate this and drive financing deeper into global supply chains. This in turn enables greater availability of financing for small and medium enterprises.”
Connie Leung, Senior Director, Financial Services Business Lead Asia, Microsoft, said
“Heavy paper processing across complex supply chain processes are a significant burden to businesses. The industry has been looking for solutions to simplify and digitize trade, making supply chain ripe for the benefits of blockchain technology.”