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From Global Trade Review (GTR) | By Sanne Wass
The we.trade blockchain platform is now live across 11 European countries, with four banks closing seven trade transactions.
The pilot transactions, which took place over the last five days, were carried out by 10 companies across five countries. The four banks involved were HSBC, KBC, Nordea and Rabobank.
Powered by Hyperledger Fabric, we.trade is a solution for managing, tracking and protecting open account trade transactions between SMEs in Europe. It connects parties involved in a trade deal in one place, helps SMEs initiate new trading relationships and provides them with easy access to a range of financing solutions.
we.trade has nine founding members, which also include Deutsche Bank, Natixis, Santander, Société Générale and UniCredit. The project’s IT vendor is IBM. In April, the banks took a crucial step toward the commercialisation of we.trade, creating a legal entity to manage and distribute the platform.
In a statement, Roberto Mancone, COO of we.trade, calls the live transactions a “massive achievement”, adding that they prove that the platform is a “robust and commercially viable proposition”.
“This really is collaboration at its finest. Not only has we.trade built a technical solution, it has also managed to create real collaboration across multiple banks and increased the connectivity of the trade ecosystem,” he says.
HSBC played a major role, taking part in four of the seven pilot transactions. While we.trade is primarily aimed at cross-border trade, it can equally be used for domestic transactions. As such, three of HSBC’s pilots was done internally between HSBC branches in the UK and Ireland, while one was executed together with Nordea.
The trade with Nordea involved UK-based company Fluid Pumps, which used the platform to complete an open account sale with GPS Food Group in Finland, supported by a bank payment undertaking.
The other banks in the consortium are currently working to complete their first transactions over the coming few months. The next step will be for the banks to bring a commercial product to the market in the fourth quarter of 2018, which will include onboarding more banks and their customers in Europe. The intention is to expand globally in 2019, with Asia being the next target market.
Other banks can join we.trade by purchasing a licence. This is designed to expand the usership as quickly as possible.
At present, we.trade is operating across 11 European countries: Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden and the UK.
“We have a very extensive list of banks knocking on the door, in various stages,” Raphael Barisaac, global co-head of trade finance at UniCredit, told GTR on the sidelines of the Blockchain Summit in London last week. But, he added, “for now, we have decided to focus on getting the commercial version up and running full steam ahead – thus enabling as many clients possible to use the platform”.
He noted that the customer feedback so far has been “very positive”.
“The customers are very enthusiastic about this solution,” he said. “The clients couldn’t care less whether you use a technology that is 20 years old or 10 years old or blockchain. They care about the value you are adding to their business. At the end of the day, the technology per se doesn’t bring any value as a stand-alone, it is an enabler – the value comes with what you are able to provide to the client as a service. And yes, by using the distributed ledger technology we are providing something extra.”
The post First four banks go live on we.trade blockchain platform appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr Bermingham
HSBC and ING have conducted their first live, commercial trade finance transaction on blockchain, for agrifood trading giant Cargill.
The deal was completed using the R3 Corda platform, with a cargo of soybeans exported from Argentina to Malaysia.
Cargill was the exporter and importer on a deal that saw Cargill Geneva selling soybeans on behalf of Cargill Argentina, and Cargill Singapore buying the goods on behalf of Cargill Malaysia.
It was done using the letter of credit (LC) module of Corda, which has been developed by 12 banks. This enabled the transaction time to be reduced from a standard five to 10 days, to 24 hours. The LC was issued by HSBC, with ING acting as the advising bank. The value of the transaction has not been disclosed.
While the LC was executed on blockchain, other elements of the transaction cycle – such as the bill of lading – were not.
Vivek Ramachandran, HSBC’s global head of innovation and growth for commercial banking, tells GTR that we can expect to see another few live transactions on this platform, as the bank learns how it interacts with the systems of other banks and corporations. However, the primary focus now will be on driving industry-wide adoption.
“We’ve still got a few more steps to do before we get to widespread adoption,” Ramachandran says. “A lot of people have been wanting to make sure that it works with a live transaction. That’s part of the reason this is exciting, to be able to demonstrate that a live commercial transaction with a flagship global trader and two global banks on each side of the transaction, actually works.”
While this is arguably the most advanced trade finance development on blockchain to date, the industry has a couple of years-long history of trialling the technology, with the hype at times reaching deafening levels.
In late-2016, Commonwealth Bank of Australia and Wells Fargo closed a US$35,000 transaction for two subsidiaries of Brighann Cotton, taking 88 bales of cotton from Texas in the US to Qingdao in China, using Skuchain’s Brackets blockchain-based solution.
Since then there have been a plethora of pilots, trials and proofs of concepts, but general frustration in the industry that nobody is bringing blockchain technology to operational trade finance. There have been signs over recent months, however, that this is getting closer.
Batavia, a blockchain-based trade finance platform developed by IBM and a consortium of five banks, completed its first live transactions with corporate clients in April and is thought to be close to commercial use.
we.trade, a European platform for managing, tracking and protecting trade transactions between SMEs, backed by nine banks, is aiming to launch to business clients in the third quarter of 2018.
In India last month, meanwhile, a government-backed invoice financing platform went live with a blockchain-based solution that allowed the various companies involved to share information to prevent double financing via blockchain. However, there is no financing element to this product.
The news comes two months after HSBC’s senior innovation manager, Joshua Kroeker, told GTR that the bank was ready to do live trade finance transactions on blockchain.
The bank had been involved in one of the earlier blockchain projects for trade finance when it worked with Bank of America Merrill Lynch and the Infocomm Development Authority of Singapore (IDA) on a proof of concept to mirror letters of credit using distributed ledger technology.
However, its work on the Corda platform has apparently accelerated beyond its other blockchain developments.
Corda is a platform owned by R3, a US company founded by David Rutter, with members including more than 200 banks, financial institutions, regulators, trade associations, professional services firms and technology companies.
In April, an application for syndicated loans called Fusion LenderComm became the first to go live on the Corda platform. The app had been piloted by banks including BNP Paribas, BNY Mellon, HSBC, ING, Natixis and State Street. It had been developed since early-2017 by fintech company Finastra and R3.
ING has also been heavily involved in the trade-based developments on blockchain technology. As well as being among the banks working with Fusion LenderComm, it was reported to be working with trading house Mercuria and French bank Société Générale to build a blockchain solution for oil trading, early in 2017.
The bank’s managing director for innovation in wholesale banking, Ivar Wiersman, says: “It’s exciting to see this transaction has been completed successfully with clear client benefits in speed and ease in execution.”
The post HSBC and ING complete live trade finance transaction on blockchain appeared first on Global Trade Review (GTR).