Banking News

Citi joins HSBC, StanChart backed Contour trade finance blockchain

Citi Citibank

Citi is joining the blockchain trade finance network, Contour. Previously known as the Voltron Letter of Credit blockchain,  Contour was commercially launched last month in Singapore. Yesterday it was announced that Citi Ventures has invested in the platform. This is one of several blockchain announcements by Citi in a matter of weeks.

Contour’s focus is digitizing the Letter of Credit process, which is currently very paperwork heavy. It aims to bring improved efficiency and transparency to the process and reduce the reconciliation between banks and trading partners. 

As an example of the transparency, typically, paper documents are couriered to separate them from cargo. But that takes time and can be intercepted. Because documents are digitally signed on the Contour platform, they are available in real-time, and there’s confidence that they haven’t been tampered with.

Over the past year, Ledger Insights reported on several pilots by the participating members of Contour. The network is currently in beta phase. 

“With international trade being of such significant importance for the global economy, with trillions of dollars’ worth of goods in circulation, proper financing is vital for its continued growth,” said Carl Wegner, CEO of Contour. “Our network provides trusted information in real-time, digitizing the process for all users. To have a major global trade player such as Citi join us is a huge validation of the work we are doing and allows us to continue creating greater efficiency for the industry.”

Based on R3’s Corda blockchain, Contour was founded by seven banks, Bangkok Bank, BNP Paribas, CTBC Holding, HSBC, ING, SEB and Standard Chartered. Other backers include consultants Bain & Company and technology partner CryptoBLK as well as R3. NatWest seems to have dropped out of the consortium during the commercial launch. 

Citi placing numerous blockchain bets

In the last few weeks, Citi announced plans to go live on the CobaltFX DLT platform. It went into production on another forex network, CLSNet. And Citi also started using Axoni’s DLT equity swap solution.

A couple of years ago, Citi was working internally on a blockchain-based supply chain finance solution. It’s also a participant in the commodity trade finance network komgo.

Other blockchain bets include an investment in Symbiont, and participation in ID2S the blockchain central securities depository for European commercial paper.

The trade finance opportunity

As of 2018, the global trade finance market was valued at $39 billion, according to Allied Market Research. Meanwhile, the Asian Development Bank estimates the global trade finance gap to be about $1.5 trillion. So, the opportunity is vast, and several blockchain projects are currently at work to capture specific markets. 

The Marco Polo Network is one such high-profile trade finance blockchain, which is initially targeting large enterprises. Based on R3’s Corda, the platform is expecting to see a client go into production soon. 

Meanwhile, we.trade, for now, is targeting SMEs.