Banking News

Bank-owned we.trade launches blockchain trade finance platform

trade trucks

Today we.trade confirmed the completion of the first live trades on the trade finance platform. The solution provides a simple user interface for business customers to log on and select the financing they need. In the run-up to the we.trade launch, Ledger Insights provided in-depth coverage.

Ten companies have executed trades with four banks over the last five days. The platform primarily targets SME’s offering open account finance like factoring or forfeiting which enable suppliers to get cash early. Buyers can also provide Bank Payment undertakings which are guarantees that the supplier will get paid.

Omer Ahsan, Head of Customer Propositions at HSBC and we.trade Board Member commented on the successful launch. He said: “Last week three of our clients executed transactions using we.trade. Fluid Pumps used the platform to complete an open account transaction with a customer in Finland, GPS Food Group completed an intercompany transaction that included the use of a Bank Payment Undertaking and also executed two open account transactions with Paragon Quality Foods.”

Nine banks

we.trade is a joint venture with nine founding banks which are Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Societe Generale and UniCredit.

That’s no mean feat. Ledger Insights previously spoke to Joshua Kroeker who heads up Blockchain and DLT for trade finance at HSBC. He said, “you need to have a place where the IP [intellectual property] sits. A central place that on boards new participants etc. And to keep it truly decentralized you need to make sure that’s a neutral party.”

Kroeker continued: “The fact that they have created this new entity I think is really fantastic and it really shouldn’t be undersold.”

Roberto Mancone, Chief Operations Officer at we.trade echoed the same sentiment: “This live trade is a massive achievement for all involved. Not only has we.trade built a technical solution, it has also managed to create real collaboration across multiple banks and increased the connectivity of the trade ecosystem. This really is collaboration at its finest.”

“These transactions prove that we.trade is a robust and commercially viable proposition. We are delighted to have launched, for the first time in the world, a blockchain based platform that enhances the overall customer experience when trading internationally. The next step will be getting buy-in from additional banks and their customers in Europe and further afield”.

According to previous statements, the intention is to have a soft launch over the summer period and ramp up in autumn. The platform is initially available in eleven European countries. However, as more banks join, new locations will come online.

One way to gain more banks would be to merge with another consortium. A marriage with five-bank Batavia might be on the cards.

Technology

The solution is built on the IBM Blockchain Platform and uses Hyperledger Fabric.

IBM’s Keith Bear, VP of Financial Markets at IBM, spoke to Ledger Insights about the achievement of nine banks coming together. He explained how each bank has “their own views on how this should be done, their own internal standards on compliance, security, their own change management processes. So to be able to consolidate into a single rulebook and a single operating model for the network is quite a challenge.”

There are three other international blockchain consortia addressing trade finance. That’s not counting multiple consortia that have a single country focus which could expand internationally. Plus there are several startups offering blockchain solutions.

There’s certainly cause for celebration at we.trade, but the race is on.


Image Copyright: TTstudio / Deposit Photos