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From Global Trade Review (GTR) | By Sanne Wass
Fintech firm TradeIX will look to accelerate the growth of the Marco Polo blockchain project, after receiving a US$16mn investment from ING and other financial players.
TradeIX is the world’s first trade finance specific open-source blockchain platform, which allows financial institutions to develop their own trade finance applications with open APIs.
The company announced last week that it had closed a series A funding round led by ING Ventures, the venture capital arm of ING, and joined by BNP Paribas, Kistefos and Tech Mahindra.
In a statement, TradeIX CEO and founder Rob Barnes calls the investment “a significant stepping stone” for the company, adding that the cash injection will be used to boost hiring, accelerate customer acquisition and platform development.
One of TradeIX’s flagship projects is Marco Polo, a platform for open account trade developed with R3 and 10 international banks, including ING and BNP Paribas.
Powered by R3’s Corda, it enables real-time connectivity between trade participants, improves visibility into trade flows and simplifies access to credit and risk mitigation services throughout the trade lifecycle.
Daniel Cotti, CFO at TradeIX, tells GTR that pilots are currently being prepared and are scheduled to begin in October. The platform will then move into production and be commercialised next year.
He says the funding round will allow TradeIX to “accelerate resources to the Marco Polo project to ensure that we maximise the potential of the industry initiative with additional trade orchestrations”, also adding that the firm will be “growing the Marco Polo ecosystem aggressively”.
The banks involved in the project at this point are Bangkok Bank, BNP Paribas, Commerzbank, DNB, ING, OP Financial Group, RBS, SMBC and Standard Chartered, with Natixis being the latest to join in late May.
Two other banks are “about to sign”, according to Cotti, who could not publicly reveal the names, but added that “we are talking to many other interested banks”.
A number of other financial institutions, including Barclays, BBVA, Bladex and Wells Fargo, were part of the original consortium developing the proof of concept, but decided to leave the project as it entered its pilot phase.
“We needed the banks to help us pay for this,” Cotti explains. “And some of the banks had too many other projects or didn’t have the budget, or weren’t able to present a business case internally that was approved.”
ING and BNP Paribas, together with Commerzbank, were the core banks driving the proof of concept throughout the second half of 2017.
With ING’s investment, the bank is now “intensifying our co-operation with TradeIX”, says Mark Buitenhek, the bank’s head of transaction services. He emphasises that while ING sees “a lot of opportunity in distributed ledger technology”, it is TradeIX’s open platform that makes it appealing.
“‘Open’ is what ING thinks the future of financial services is going to be,” he adds.
According to Benoit Legrand, chief innovation officer of ING and CEO of ING Ventures, the investment means the bank can offer TradeIX’s solution to “even more clients in the near future”.
The announcement comes just a few weeks after another blockchain consortium announced it is going into production with a similar blockchain solution. The we.trade platform is powered by Hyperledger Fabric and is developed by nine European banks together with IBM.
Speaking at the Money2020 fintech conference in Amsterdam in early-June, Joost Volker, lead product manager of trade at Rabobank, said we.trade is “now in a production environment” and will host its first transactions later in the same month. He added that the consortium will “use the period after summer for a large roll-out” to the broader market.
While there are technical differences between the Hyperledger Fabric and Corda blockchain frameworks, we.trade is, like Marco Polo, a solution for tracking and financing open account trade. However, we.trade is mainly focused on SMEs trading within Europe, whereas Marco Polo will be a global platform for all types of clients.
The post TradeIX to “aggressively” grow blockchain ecosystem after ING investment 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).