Blockchain for Banking News

Daimler, Dürr, LBBW execute blockchain deal on Marco Polo

daimler mercedes

Today, German bank LBBW said it facilitated a pilot trade finance transaction for automaker Daimler and engineering firm Dürr using the Marco Polo blockchain network. LBBW is Germany’s biggest state-backed Landesbank lender as of 2018. It is also a founding member of Marco Polo Network.

The blockchain trade finance network currently has 23 members, and more counting unpublished participants. Bank of America was the most recent addition. TradeIX is the technology partner, and it uses R3’s Corda distributed ledger technology (DLT).

The transaction involved the order and delivery agreement for a balancing system from Dürr subsidiary Schenck via the Marco Polo network. LBBW provided the financing and the payment commitment on behalf of Daimler.

Sourcing engineering materials from a foreign country has several intermediaries such as logistics providers, insurers and customs authority. All of them need to be on the same page for a trade to be executed and involves a lengthy reconciliation process. With blockchain, the order and delivery agreement were executed within minutes, said LBBW.

Once the balancing system was delivered, the order data was reconciled with previously agreed transaction terms. Automated payments were then triggered.

“The successful pilot project between Daimler and LBBW demonstrates the intrinsic efficiency potential of digital trade finance processes. Innovative platforms and technologies such as Marco Polo und Corda allow us to reduce complexities in order fulfillment – to the benefit of all participants,” said Susanne Schlegel, CFO of Carl Schenck AG and Dürr Division Measuring and Process Systems.

This is the third such transaction by LBBW, following previous deals with Voith and KSB.

“It is our goal to collect practical experience with this innovative technology and – together with our core customers and additional trade finance partners – further advance the development of a trade finance ecosystem based on DLT (distributed ledger technology). For the first time in this transaction, we successfully tested the complete execution in the bank’s management systems – this is an important step towards reaching full production maturity,” said Matthias Heuser, Head of International Trade and Payment Solutions of LBBW.