Blockchain Trade Finance Network Marco Polo Completes First Commercial Transactions

Blockchain, News | March 29, 2019 By:

Marco Polo, a blockchain trade finance network that aims to bring significant efficiencies in financing trade, has successfully facilitated two commercial transactions.

The Marco Polo Network was launched in 2017 by the world’s leading financial institutions including ING, Commerzbank, BNP Paribas, Anglo-Gulf Trade Bank, NatWest, Natixis, Bangkok Bank, and others. Based on R3’s Corda blockchain, the network allows banks to easily integrate into trade orchestrations, bringing in ERP, procure to pay, logistics, payment, insurance data, real-time into the transactions.

The two commercial transactions, which was facilitated in cooperation with Marco Polo founding members – Commerzbank and LBBW, took place between international technology group Voith and pump and valve manufacturer KSB SE. One transaction involved the delivery of hydraulic couplings from Germany to China, while the other saw the delivery of pumps within Germany.

In the transactions, order and delivery details were agreed between the companies via the Marco Polo network and the payment term was secured by a conditional payment commitment from the buyer’s bank. After delivery, the corresponding delivery details were entered into the network and automatically matched with previously agreed data, triggering an irrevocable payment obligation on the part of the buyer’s bank. The overall flow of information was efficiently and transparently mapped by R3’s Corda blockchain platform.

Gerald Böhm, head of Guarantees and Trade Finance at Voith, said that Voith is always interested in innovative technology solutions in the field of finance, adding that the cooperation with LBBW and Commerzbank offers them an opportunity to actively shape and incorporate the company’s perspective into the further development of the products on offer.

“Despite the elation surrounding the successful execution of the first two commercial transactions via the platform, a great deal of work still lies ahead,” Böhm said. “For example, in spite of the numerous advantages that are independent of the specific platform, standardised global governance must be established for the digital execution of commercial transactions.”

Following the successful pilot, the next step will focus on the complete execution of transactions via the Marco Polo network with a direct connection to the customers’ management systems (ERP integration) in order to offer customers a seamless process. In future, the aim is to expand the network to more banks and participants from the transportation and insurance sectors so that the entire value chain for foreign trade transactions is represented digitally with data.

“The transaction proves that blockchain technology offers our clients a payment undertaking and state-of-the-art financing for trade transactions with both foreign countries and domestically,” said Nikolaus Giesbert, divisional board member for Trade Finance & Cash Management at Commerzbank. “We place particular emphasis on collaboration with experienced and interested corporate clients such as KSB and Voith as well as banks such as LBBW. We see a valuable opportunity here to work together to develop and bring to the market innovative trade finance solutions.”