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Trade consortia continue momentum

The momentum behind a couple of the blockchain-based trade consortia shows no sign of abating, with new announcements from both Marco Polo and Contour this week. First, İşbank and Commerzbank have jointly run an international trade finance transaction based on distributed ledger technology (DLT). Payments were secured by digitally processing the related data transfer via Corda blockchain technology on the Marco Polo trade finance network.

İşbank is the first bank in Turkey to perform a trade finance transaction using blockchain technology. The transaction took place on 27 May 2020 between İşbank, Şişecam, Kuraray Europe, and Commerzbank and supported the trade of laminated glass interlayers from Germany to Turkey.

“Increasing security, speed, and operational efficiency in international trade, this technology is a paradigm change for foreign trade supply chains”, İşbank’s Deputy Chief Executive Şahismail Şimşek is convinced: “As İşbank, we offer innovative solutions to our customers’ financing needs with our firsts in technology. Now, with this pilot transaction using blockchain technology, we are starting a reliable and easier period based on matching data in foreign trade. We aim to offer new experiences to our customers by taking part in new technological developments in the world and developing foreign trade products over blockchain technology.”

Marco Polo is a collaboration network focussed on securing payments and financing of trade transactions. Its DLT allows foreign trade transactions to be financed securely and in a very efficient manner. Transactions are safe and transparent and can be processed in a trusted environment.

With R3’s Corda technology underpinning Marco Polo, the trade transaction data was only distributed to the parties along the workflow of the trade, making the settlement processes much quicker and more efficient. It is also possible to integrate third parties into the data flows where required by banks and trade partners. All parties involved were able to communicate and view trading data simultaneously.

“After having processed various Marco Polo Payment Commitment pilot transactions last year, we are now very happy to have piloted with İşbank an advanced pre-live version of the platform," said Enno-Burghard Weitzel, head of Trade Product Management at Commerzbank. "We ensured the technical performance and validated the workflow with our corporates to pave the way to production.”

Juliane Löbig, director Finance & Accounting at Kuraray Europe, added that “... the technology of Marco Polo offers three big advantages. Firstly, it supports a trustful relationship between business partners and helps to offer unique services for our customers. Secondly, the platform supports our efforts to further digitalise business processes. Thirdly, Marco Polo Blockchain solution perfectly fits to one key part of Kuraray’s mission to use pioneering technologies.”

Contour adds expertise

Contour has also been stretching its legs in terms of new functionality recently, as we reported on CTMfile last month that it had completed a Baosteel and Rio Tinto deal, supported by Chinsay, DBS Bank, essDOCS and Standard Chartered Bank. In the past week, the Singapore-based open trade finance blockchain network has also announced the hire of a former HSBC blockchain executive. Joshua Kroeker joins Contour as its chief product officer. Most recently, Kroeker was at HSBC as their global lead for blockchain within their commercial bank.

At Contour, Kroeker will be using his experience to develop a trade finance product suite that Contour’s network of banks, corporates, and partners can use to digitise their global trade finance processes. 

At HSBC, Kroeker most recently led a global team tasked with understanding the potential application of blockchain technology for trade finance – an industry historically difficult to digitise. In collaboration with other banks throughout the world, Kroeker and his team also led efforts to develop this technology in Europe with We.Trade, as well as with eTradeConnect in Hong Kong. 

Prior to his focus on blockchain technology, he led HSBC’s traditional trade digitisation efforts by developing digital channels and partnering with industry providers such as SWIFT, Bolero and essDOCS to reduce the over-reliance on paper in the industry. 

Portugal sees first use of Bolero's trade digitisation platform by corporate and bank 

In other trade digitisation news, Portuguese bank Caixa Geral de Depósitos (CGD), and Mibepa, an expanding Portuguese importer of raw materials for the plastics industry, have used Bolero’s trade digitisation platform to accelerate a major shipment of polythene from India.

Bolero’s end-to-end digital presentation enabled the parties to achieve faster completion of the transaction by accelerating document flows despite all difficulties caused by the current coronavirus pandemic, including restrictions on movement of paper trade documents.

The transaction is a double-first for Bolero, since this was the first time either Portuguese company has used the paperless Bolero trade finance digitisation platform. It also marks Bolero’s entry into the Portuguese financial eco-system as part of its continuing global growth.

As a fully end-to-end electronic presentation (ePresentation) including the Bolero eBL (electronic bill of lading), all parties to this transaction were connected to the Bolero trade digitisation platform. Mibepa was the customer and applicant, with CGD acting as the first-ever Portuguese ePresentation receiving bank. The shipment was conveyed by one of the world’s largest container logistics companies. The letter of credit for the transaction was issued under eUCP and all documents required under this letter of credit, including the bill of lading, were presented electronically using the Bolero trade digitisation platform, supported by the unique Bolero legal rulebook.

“Achieving fast turnaround in this transaction despite the coronavirus was a big advantage for us as an expanding business with international relationships," commented Paulo Dinis, CEO at Mibepa. "Bolero’s trade digitisation solution met all our expectations, enabling us to avoid any problems caused by the pandemic. I’m sure this is set to be the first of more such transactions.”

“The Bolero trade digitisation platform made this first transaction fast and simple, overcoming all the disruption caused by the coronavirus pandemic," added Armando Santos, head of Corporate Banking Marketing at CGD. "We use digital technology that helps our customers achieve significant efficiencies. We are very pleased to become Bolero subscribers and expect more of our customers to embrace Bolero and the benefits of trade document digitisation.”

Once again, digital tools have helped corporates thrive at a time when paper-based manual processes have been severely impacted by the fallout from the pandemic.

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