MUFG Bank has executed its first live digital transaction on komgo, a blockchain-based commodity trade finance platform led by KomGo SA, a venture formed in August 2018 by the bank and fourteen other global institutions. The consortium behind KomGo SA, including commodity trading and corporate companies, aim to digitalise the commodity trade finance sector through a blockchain-based open platform.
KomGo SA has developed a secure platform that is part of an emerging global ecosystem aiming to optimise commodities trading and commodity trade finance operations. komgo offers various digital trade finance products including letters of credit, standby letters of credit and receivables discounting, allowing commodity traders or other corporates to submit digital trade data and documents to banks of their choice. In addition, komgo offers a KYC module that standardises and facilitates the KYC process without using a central database, where the exchange of documents is executed with encryption over the blockchain on a need to know basis.
The commodity trade and trade finance industry has been notoriously governed by paper-based manual processes. KomGo SA’s blockchain platform is designed to allow increased speed through paperless operations, efficiency through digitalisation, fraud reduction through data privacy and immutability, and security through encrypted technology.
As KomGo SA’s sole Asian shareholder, MUFG Bank, alongside the other global shareholders, is using the platform to promote digitalisation within the commodity trade finance industry. This first letter of credit was executed on KomGo SA’s platform in MUFG’s London office for Mercuria Energy Trading SA, a commodity trading company.
Digitalisation is one of the key initiatives under the MUFG Re-Imagining Strategy. MUFG is striving to utilise digital technologies to serve clients more efficiently and improve productivity by automating internal processes. MUFG says it will continue to support komgo’s global development, using the platform to accelerate digitisation of business activities.
The founders of KomGo SA, which is managed and operated as an independent entity, include companies from: MUFG Bank, ABN AMRO, BNP Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, Natixis, Rabobank, Shell, SGS and Société Générale.
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