Recently, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) and Mitsui & Co completed a trade finance Proof of Concept (PoC) on the Marco Polo blockchain. The trial was based on a real cross-border trade between Mitsui and Indonesia’s Indorama Ventures.
For the trial, Marco Polo member Bangkok Bank issued a payment guarantee for Indorama to Mitsui. The blockchain platform also enabled Mitsui to request receivables financing from SMBC based on the payment guarantee.
The latest test follows a PoC by SMBC with Mitsui eight months ago. The Japanese bank plans to go live on the Marco Polo network later this year.
Currently, in the pilot phase, Marco Polo is underpinned by R3’s Corda, with TradeIX as the technology provider. The platform offers ERP integration and supports Microsoft Dynamics 365, Xero, and Oracle Netsuite. In this case, Indorma and Mitsui uploaded the trade documents on the platform and requested financing from the respective banks.
The announcement said each party was able to update data regarding purchase orders, invoices, shipping, the port of loading/destination and shipping dates, among other things.
With blockchain, all permissioned parties were able to view the progress of the transaction. This reduced the reconciliation time by automating the process using the Marco Polo platform.
The Marco Polo Network is one of the most significant blockchain trade finance initiatives. Big names part of the 23+ member Network include Bank of America, Commerzbank, ING, Mastercard, Natixis, Standard Bank, and Standard Chartered, among others. Marco Polo competes with other trade finance initiatives such as we.trade, komgo and Voltron.
In the run-up to launch, there have been several pilots. Recently, Russia’s Alfa-Bank and Germany’s Commerzbank executed a payments pilot on the Marco Polo Network for a transaction between Novolipetsk Steel and Vesuvius GmbH.
Last month, another German bank LBBW ran a trial on the platform for a transaction between automaker Daimler and mechanical engineering firm Dürr.