1. Home
  2. Trade & FSC Management
  3. Financial Supply Chain Platforms

Marco Polo aims to be big in Japan

Sumitomo Mitsui Banking Corporation (SMBC) says that it has been striving to realise the digital transformation of trade finance after it began participating in the digital trade platform Marco Polo in March 2018. Now the bank has announced the successful execution of the first trade accounts receivable discounting transaction on Marco Polo with a Japanese corporate client after the client became the first Japanese business corporation to conclude a production license agreement with the digital trade platform.

Digitising trade finance

Trade operations is a field in which complicated business processes involving the exchange of paper documents between multiple parties exists. Digitisation to improve efficiencies has been lagging in this area but, due in part to the COVID-19 pandemic, momentum for customers to review their business processes through digital transformation is increasing. SMBC says it has been focusing on the digitisation of trade operations using blockchain and has supported the development of Marco Polo after becoming the first Japanese bank to invest in the platform in April this year.

The cashing of export trade receivables by corporates who trade with overseas counterparties has been gaining popularity as an effective means of raising funds. However, compiling the necessary export documents and information can at times be a complex process that can limit the scope of trade transactions that corporates are willing to engage with. In contrast, a digital trade platform allows corporates to streamline the required paperwork, allowing those customers to apply trade finance to trade transactions that had traditionally not been considered due to the complexity of the process.

SMBC has been engaging in preparations to execute a live transaction using Marco Polo since the success of the platform’s proof of concept in January 2019. SMBC will leverage the experience it has gained in executing the first trade finance transaction with a Japanese business corporation on Marco Polo as a steppingstone to develop a framework that offers its customers consistent access to an efficient trade finance process, coordinate with digital trade finance platforms that are spreading throughout the world and their users, support customers’ digital transformation, and engage in other efforts to further enhance the quality of its solutions as customers face a rapidly changing business environment.

Building on success

Back in May, Marco Polo had two successful transactions in partnership with Commerzbank, which joined with İşbank and LBBW to become one of the first banks to execute commercial transactions with German and Turkish corporate clients via the Marco Polo trade finance network in a live environment. The purpose of these transactions was to establish an irrevocable payment commitment to the supplier, issued by the buyer’s bank.

The first cross-border transaction took place on 10 May 2021, in cooperation with İşbank, between chemicals firm Kuraray Europe and major glass manufacturer Şişecam. The underlying commercial transaction involved the export of laminated special glass interlayers from Germany to Turkey. The payment by open account has been replaced by an irrevocable payment undertaking with digital exchange and matching of trade data. 

The second transaction - the ‘go-live’ in Commerzbank’s home market of Germany, followed on 20 May 2021, in cooperation with LBBW and between pump and valve manufacturer KSB and the technology group Voith. The underlying transaction was the purchase of special couplings. As with Commerzbank’s first live transaction, the data transfers required to secure payments between KSB and Voith, as well as the credit institutions involved, were performed in a secure and closed area, with access only permitted to the parties involved in the transaction.

Like this item? Get our Weekly Update newsletter. Subscribe today

Also see

Add a comment

New comment submissions are moderated.