Trade finance does not seem to have a strong sense of existence, but it affects the world's $17 trillion international trade market. In trade finance, banks promote international trade by providing financial services to buyers and sellers. Banks are seeking to reduce costs and improve efficiency through innovative distributed ledger technology.
The pilot application of blockchain technology in trade finance is more successful than in other fields, but will the conservative banks dare to take the risk of promoting blockchain technology in an all-round way?
Before the blockchain technology can be fully promoted from the pilot, it is necessary to solve the broader issues of related regulations, scalability, and security.
Why is trade finance so important? Trade finance supports the US$17 trillion international trade market, and it is estimated that it also represents a trade volume of 5 trillion to 10 trillion. In addition, there is about 1.5 trillion U.S. dollars in trade finance demand.
Why is now a good time? In trade finance, banks promote international trade by providing financial services to buyers and sellers. However, with the escalation of the trade war between the United States and other countries, including China, banks are seeking to reduce risks through technological innovation.
What does the bank do? In the short term, banks are reducing their reliance on manual processes, which are outdated, and are digitizing key trade documents such as letters of credit (LOCs) to reduce costs and improve efficiency.
Other organizations are trying to completely replace this process with long-term distributed ledger technologies (DLTs).
From the media, we can see that this trend is becoming more and more obvious. The media mentions "trade finance and distributed ledger technology" more frequently than when it mentions "trade finance" alone.
The increase in news coverage is also related to several distributed ledger technology projects being piloted by banks and regulators
This analysis explored 5 major blockchain alliances-Voltron, Marco Polo, Batavia, we.trade, and HKTFP-mainly focused on the trade finance application of distributed ledger technology, and studied their recent activities and major milestones .
Trade Finance Blockchain Alliance
Advantages of distributed ledger technology
Due to the traceability, transparency, and high efficiency of distributed ledger technology, trade finance will benefit a lot from it.
Banks are the biggest advocates of distributed ledgers because they are safe and accessible to some market participants. Buying and selling transactions and operations are also more transparent, including everything from tracking invoices to digitizing documents.
Because this technology is still very new, banks tend to use this technology in a closed environment. They also have regulatory overhead and security considerations, and through multi-party cooperation, they can design and implement proof-of-concept (POC) pilots aimed at creating more efficient trade finance processes.
Trade Finance Blockchain Alliance
Voltron
Trade Finance Blockchain Alliance
What is Voltron: Voltron is led by R3 and CryptoBLK, and is supported by the Microsoft cloud platform Azure technology. Voltron already owns Bangkok Bank (Bangkok Bank), Spanish Bank (BBVA), BNP Paribas, HSBC (HSBC), ING, Intesa Sanpaolo, Mizuho Bank ( Mizuho, ​​Royal Bank of Scotland (RBS), Scotiabank (Scotiabank), Swedish Nordic Bank (SEB) and Bank of America (US Bank), including 12 banks as partners.
Introduction: Voltron uses R3's distributed ledger platform to digitize paper-based letters of credit (LOCs). In order to reduce fraud and accelerate document turnover, banks are eager to digitize this highly manual process. The alliance has made progress in trade finance through its distributed ledger platform called Corda. In July 2018, R3 turned to the B2B field with the help of Corda Enterprise Edition, which is a commercial application of its B2C blockchain.
Milestone: In May 2018, HSBC and NH Group used Corda and CryptoBLK to establish a partnership, and successfully completed the provision of a letter of credit for Cargill to transport soybeans from Argentina to Malaysia. Voltron shortened the 5 to 10 days manual operation process to just 1 day. The next step is to expand Voltron's application to more banks.
MARCO POLO
Trade Finance Blockchain Alliance
What is MARCO POLO: It is a partnership between TradeIX and R3 and has 14 major financial institution partners, including RBS's NatWest, a subsidiary of Royal Bank of Scotland, BNP Paribas, Commerzbank ), Royal Dutch Group (ING), Norwegian Bank (DNB), OP Financial, Bangkok Bank (Bangkok Bank), Sumitomo Mitsui Banking Corporation (SMBC), Standard Chartered Bank (Standard Chartered), and NaTIxis ) Inside.
Introduction: This partnership combines R3's Corda enterprise solution with TradeIX's TIX Core application, and is an open architecture driven by distributed ledger. The purpose is to rationalize commercial accounting to track payment guarantees and accelerate the discounting of accounts receivable.
Milestone: In October 2017, TradeIX announced one of the earliest successful pilots of trade finance. Using TIX Core, Standard Chartered Bank can digitize the discounting of accounts receivable and at the same time guarantee the credit risk of an undisclosed logistics company through American International Group Insurance (AIG).
BATAVIA
Trade Finance Blockchain Alliance
What is BATAVIA: 5 inter-bank alliances established on the IBM blockchain platform (UBS, Bank of Montreal, CaixaBank, Commerzbank, Commerzbank), And Austria's First Savings Bank (Erste Group)).
Introduction: Batavia has a wider range of applications than other projects, and uses smart contracts to help all participants track and monitor their public transactions in cross-border trade.
Milestones: In April 2018, the group conducted two import trials: it imported German cars and Austrian textiles to Spain. During the pilot period, when goods are transported by land and sea, participants can monitor every step of the trade. In the future, they hope to increase air transport traceability before the official release.
WE.TRADE
Trade Finance Blockchain Alliance
What is WE.TRADE: an alliance of 9 banks, including Rabobank, Deutsche Bank, HSBC, Union Bank of Belgium (KBC), and NaTIxis , Societé Generale, UniCredit, Nordea, and Santander. This platform is built on the IBM blockchain using Hyperledger Fabric.
Introduction: For European small and medium-sized enterprises (SMEs), the platform uses smart contracts (a protocol based on the Ethereum blockchain) to replace letters of credit to provide suppliers with faster insurance payment agents (or partial invoice financing).
Milestone: In July 2018, We.Trade reported that it has been able to operate in 11 European countries and successfully executed 7 trade transactions involving 10 companies on the platform.
HKTFP (Hong Kong Trade Finance Platform)
Trade Finance Blockchain Alliance
What is HKTFP: A joint venture established by the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS), with technical support provided by Ping An Group. Including HSBC, Standard Chartered, Hang Seng Bank, Bank of East Asia, Australia and New Zealand Banking Group, Singapore's 21 banks including DBS Group).
Introduction: HKTFP was established to digitize supply chain records and eventually establish connections with other trading platforms (such as Marco Polo or we.trade) to further promote cross-border trade. It is planned to be launched later this year.
Upcoming milestone: Looking forward to launching with selected alliances at the end of 2018.
LAN CABLE Cat5e/Cat6/Cat7/Cat8 Cable
CIXI LANGUANG PHOTOELECTRIC TECHNOLOGY CO..LTD , https://www.cxblueray.com