- Investment Areas
By Sanne Wass
The group behind the Marco Polo blockchain trade finance project – R3, TradeIX and a number of international banks – have successfully carried out their first proof of concept and are now ready kick off the project’s pilots.
Launched in September 2017, Marco Polo is an initiative to develop an open account trade finance platform powered by blockchain technology, which aims to enable real-time connectivity between trade participants, improve visibility into trade flows and simplify access to credit and risk mitigation services throughout the trade lifecycle.
BNP Paribas, Commerzbank and ING have been the core banks taking part in the proof of concept throughout the second half of 2017.
According to Ivar Wiersma, head of innovation at ING, the technology “ran fast and smoothly and the positive results showed us we are on the right track and ready to take the next step by entering into a pilot”.
Other banks involved in the initiative since its launch in September include Bangkok Bank, Barclays, BBVA, Bladex, CTBC Bank, Intesa Sanpaolo, Shinhan Bank, Royal Bank of Scotland and Wells Fargo. Standard Chartered, DNB and OP Financial Group have joined the project more recently.
“The fact that more banks have joined illustrates the interest in this project and in the potential of distributed ledger technology in supply chain finance solutions,” says Jacques Levet, head of transaction banking, Emea at BNP Paribas.
The parties are now working with corporates and other trade finance players on internal infrastructure setup, preparing to enter into the pilot phase, an initial and limited roll-out of the system into production. Banks will complete different pilots depending on their specific focus within trade finance.
Initially the initiative is focused on three areas of trade finance: risk mitigation, payables finance and receivables finance, but will expand as the banks become familiar with the technology and infrastructure.
The solutions will be delivered via TradeIX’s TIX platform, an open platform providing trade finance specific tools, applications and APIs, built on R3’s Corda as the underlying blockchain infrastructure.
“The initial project is about connecting buyers, sellers, banks, trade service providers in the open account ecosystem, connecting them all on one single information layer that collects critical trade data around purchase orders, invoices, financing activities. Then solutions are built on top of that,” explained David Sutter, head of platform strategy at TradeIX, to GTR at the time of the project launch.
He also said they hope to on-board in total 20 to 25 banks by the end of 2018. The ambition is to expand the initiative to include third-party service providers, such as credit insurers, software companies and logistics providers. R3 expects to go into production in late-2018 or early-2019.
Marco Polo is one out of two trade finance projects that R3 is running simultaneously. The other, Voltron, was the first trade finance prototype to be showcased by R3 in mid-2017. Built together with CGI and a group of 11 global banks, the aim is to streamline the processing of sight letters of credit, and the parties are currently piloting the platform with the goal of making it widely available this year.
Speaking to GTR in September, Sophie Wiberg Holm, project lead at R3, said the two applications “complement each other nicely”, and that, down the road, the larger strategy is “to see how these different trade finance initiatives can merge into a larger ecosystem of trade products”.
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