I would like to introduce the theme of “Trade finance × blockchain”. Problems encountered in trade transactions and associated financing 1.the process of completing a transaction takes a long time due to a large number of participants 2.paper based communication is taking place am […]
I would like to introduce the theme of “Trade finance × blockchain”.
Problems encountered in trade transactions and associated financing
1.the process of completing a transaction takes a long time due to a large number of participants
2.paper based communication is taking place among them
3.The occurrence of inconsistencies in understanding due to differences in language, business practices, and cultures
I think the above is the point.
According to “Global Trade Review” magazine, which publishes trade finance journals worldwide, the current situation is “With only 1 container transported by sea, 36 kinds of documents, 240 pages in total, need to be processed by 27 people.” which means how inefficient the current procedure is.
Let’s apply the characteristics of the blockchain to the above problems.
1.The process of completing a transaction takes a long time due to a large number of participants
⇒Reduced processing time with smart contracts (automatic execution of a contract)
2.In which paper-based communication takes place.
⇒Information is transmitted instantly by exchanging electronic information.
3.Perception discrepancies arising from language differences, business practices, and cultural differences
⇒Terms and conditions are recorded on the blockchain and are readily available for review, so there are few gaps in understanding.
As you can see, the blockchain solves the problems of existing trade finance.
In this way, trade finance and blockchain are very compatible, and the market size of trade finance itself is large, so various projects are underway.
Corda Case Study/”Contour (Old Voltron)”
“Contour” has just been renamed from “Voltron” and is one of the most notable and well known trade finance projects. It’s being developed in partnership with Hong Kong technology company CryptoBLK, US consulting firm Bain & Company, and R3.
Enterprise deployment benefits
・Get information in real time
・Increase in the speed of financing
・Improving productivity and reducing costs of trade processes through digitization
・Increased transparency of transactions
Benefits of introduction by financial institutions
・Improve customer satisfaction and increase transaction share by providing highly convenient systems for users
・Reduce costs by digitizing transaction processes and increasing productivity
・Enhancing compliance functions by increasing transaction transparency
In the most recent pilot, more than 50 banks and companies participated and conducted multiple digital credit simulations.As a result, 96% of the participants said the “Contour” will accelerate the issuance of letters of credit, improve efficiency and reduce costs.
In this way, “Contour” has been highly evaluated by the participating companies of the demonstration experiment, and it is in the state of making progress toward commercialization which is scheduled in Q2 2020.