Euromoney: Seven-bank consortium to deliver trade finance on blockchain this year

06 February 2017

In January, seven European banks signed a collaboration agreement to put into production later this year a new platform called Digital Trade Chain (DTC). This will be built on the back of a prototype designed by the Belgian bank KBC that has already been tested to the proof-of-concept stage.

The platform uses distributed ledger technology to bring new levels of simplicity, efficiency, security and transparency to the paper-heavy blizzard of often manual and insecure processes companies undertake today after a buyer has agreed to purchase goods and a supplier to deliver them.

The DTC platform will allow onto it the seven banks and their networks of small and medium-sized enterprise (SME) clients that have already undergone know-your-customer and anti-money laundering checks with those lenders and so are known and permissioned entities.

It will also bring in logistics companies using the latest track-and-trace technology to verify the arrival of goods in agreed condition at key points in the journey from supplier to buyer that will then trigger payments automatically.

Company executives such as purchasing and stock managers as well as treasury officials will be able to access DTC on tablets and mobiles. It’s almost like a smart-phone app for trade that registers the entire process from order to payment, displaying it in an at-a-glance flowchart and guaranteeing payment when all contractual agreements have been met.

The platform is fully automated and available 24/7, so the order-to-payment process is much quicker than the traditional exchange of documents. It also requires far less back-office administration.

Roberto Mancone, global head of disruptive technologies and solutions at Deutsche Bank, a member of the DTC consortium, says: "Blockchain is one of three disruptive technologies – the other two being artificial intelligence and the internet of things – that are now rapidly converging to change the banking business profoundly.

"Last year we saw lots of proofs of concept both to confirm use cases and test if the technology was mature and viable. Now in 2017 we will see banks coming together to use these technologies and establish new legal frameworks to put useful products into commercial production."

Hubert Benoot, general manager of trade finance at KBC, explains: "We have been focusing on intra-European trade among SMEs that often takes place on an open account basis, much of it requiring advance payment from the buyer to the seller."

Full article


© Euromoney Institutional Investor PLC