Banks Develop DLT Finance App

Blockchain, FinTech, Innovation | August 8, 2017 By:

Financial consortium R3 has announced that a group of 11 banks have developed a trade finance application on R3’s distributed ledger platform, Corda.

The banks involved are Bangkok Bank, BBVA, BNP Paribas, HSBC, ING, Intesa Sanpaolo, Mizuho, RBS, Scotiabank, SEB and US Bank.

The banks have been collaborating with R3 and technology partner CGI over the last year. The group has developed an application that incorporates shippers and carriers. The group said the application could significantly reduce inefficiencies and costs by streamlining the processing of sight letters of credit (LCs). Several R3 member institutions intend to pilot the platform, with the goal of making it widely available in 2018.

“Like so many of the processes and systems banks are forced to use today, the infrastructure that supports trade financing is extremely outdated and prone to risk and error,” said R3 CEO David Rutter. “The work we have been doing with our members over the last year has shown that this challenge no longer needs to stand in the way of giving businesses access to the services they need to trade across borders. The application we have built is the first of its kind, and we look forward to rolling it out to our Corda users across the world.”

Vivek Ramachandran, Head of Growth and Innovation, Commercial Banking at HSBC, explained that the prototype integrates a standardized user interface that allows carriers and shipping companies to prepare and validate shipping details when they onboard goods and deliver them to the buyer – even if they are on a different technology platform.

“We believe that offering optionality in terms of the systems and technologies participants use, and ensuring interoperability between these technologies, will significantly advance efforts to digitize trade,” said Ramachandran. “To further enhance the prototype, we’ll continue to work with established and emerging title registry providers to ensure this solution can provide a secure and legal title transfer of goods in a live environment, and anticipate piloting the app on the R3 network before the end of the year.”

Ivar Wiersma, Head of Innovation Wholesale Banking at ING, said the application has the capacity to make the overall trade flow, currently hampered by outdated processes, faster and more cost-effective.

“This is a great step forward in the process of digitalizing and standardizing the documentary trade finance process from start to finish, connecting multiple parties in the trade finance chain with interoperability of the different technologies these parties use,” said Wiersma.