Alfa-Bank is the first Russian bank to join Contour, the international blockchain trade finance platform. The digital network founded by major financial organizations including HSBC, BNP Paribas, ING and Standard Chartered aims to optimize the processes involved in issuing Letters of Credit (LCs) and improve trade across the globe.
Issuing paper-based LCs is a long, costly, labor-intensive process that leaves significant room for human error and fraud. Alfa-Bank predicts Contour’s mechanism will reduce LC issuance processing time by 90% (from 10 days to 24 hours), significantly cutting operating costs. Furthermore, Contour allows bank customers to monitor the processing of and modifications to the trade’s transaction in real time, ensuring transparency in the process and enhancing customers’ trust.
Contour leverages R3’s Corda blockchain technology. Alpha-Bank has been involved with R3 since 2018 and is also a member of the Corda-based Marco Polo trade finance platform.
Alpha-Bank has already launched pilot projects in the Russian market. Evgenia Fomina, head of the bank’s Lending Directorate, expects that the implementation of Contour in the bank’ system will “fine-tune the strategy of development of products for transborder transactions”.
Although numerous pilots were completed, including a global trial involving 50 banks and corporates, Contour, formerly called Voltron, went live just last month. It is the last of the “big four” trade finance blockchains to go into production, following we.trade and komgo in 2018, and Marco Polo in 2019. The Covid-19 pandemic’s surge alongside the never ending lockdowns and social distancing measures that came with it has amplified the need for more effective and contactless methods to conduct trade. The timing of Contour’s launch might help the platform gain momentum to expand its network. However, other trade finance blockchain networks have experienced delays between launch and the network effect to kick in.
Meanwhile, South Africa’s Standard Bank, which is also a member of Marco Polo, joined Contour at the end of September. Sumitomo Mitsui Financial Group (SMBC) and DBS Bank joined the network earlier this year.