Today, DBS Bank joined the Contour trade finance blockchain network to streamline letter of credit transactions for its customers, a Business Times report said. Previously known as Voltron or Letter of Credit blockchain, Singapore-based Contour had a beta launch earlier this year.
As of 2019, DBS Bank had total assets of S$579 billion ($409 billion) and is among Asia’s top banks. It has deep experience in leveraging blockchain for trade finance. DBS is also the first Singapore bank to join the Contour blockchain, which is digitizing the letter of credit processes such as creation, exchange, approval, and issuance.
Letter of credit (LoC) transactions are heavy on paperwork and require extensive document verification. Paper documents are generally couriered separately from the shipment, which could result in delays and introduces scope for fraud. It is a relatively complicated process and commonly used by larger organizations.
Leveraging Contour’s ecosystem, DBS aims to provide digital transfer of trade and title documents, to reduce settlement time, paperwork and prevent tampering. Contour previously said its platform was able to reduce LoC transaction time to 24 hours from 5-10 days.
While efficiency is one aspect, DBS said contactless banking is the priority during the ongoing COVID-19 pandemic, and digitizing trade processes could be a solution.
“This is more than simply digitizing an historically paper-based service; it’s about transforming the way industries work by providing greater transparency, security and speed to build sustainable trade ecosystems that are able to weather the peaks and troughs of economic cycles and are resilient in times of crisis,” said John Laurens, group head of global transaction services at DBS Bank.
Although DBS is the first Singapore bank on the Contour platform, it is joining several Asian banking peers. Built using R3’s Corda blockchain, Contour was founded by seven banks — Bangkok Bank, BNP Paribas, CTBC Holding, HSBC, ING, SEB, and Standard Chartered with Citi and Vietnam’s HD Bank joining recently. HSBC and others have carried out several pilots on the platform, which is supported by CryptoBLK as the technology partner and Bain & Co as consultant.
DBS’ blockchain track record
However, DBS has been actively exploring blockchain trade finance and was the first to go public as a member of dltledgers, the Singapore-based trade network, which has processed over $3 billion since its launch. It funded several shipments for agribusiness Agrocorp, and helped onboard Australian farmers on the blockchain network.
Last month, DBS, as the banking partner of Tech Mahindra, trialed the Marco Polo trade finance blockchain.