Announcements

New collaboration on trade finance platform built on blockchain

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Challenges in international trade finance are a major barrier to growth in global trade. Trading partners today rely on a on complex and paper-heavy process to secure their transactions. Seeking to address this issue, Swiss bank UBS and IBM began work in 2016 on a global trade platform based on blockchain, the shared, distributed ledger technology that proposes to increase trust by facilitating greater transparency in transactions. Today, it was announced that four more banks, Bank of Montreal (BMO), CaixaBank, Commerzbank and Erste Group, will join the initiative.

The new blockchain-based trade platform is called Batavia and it is being collaboratively developed by the five banks and IBM in consultation with transportation industry experts and the banks’ customers. Built to be openly accessed by organizations big and small around the world, the platform is designed to help support the creation of multi-party, cross-border trading networks. Check out the press release to learn more.

Learn more about blockchain for financial services

Putting trade finance on blockchain

To understand the benefits of using blockchain for trade finance, you have to know why trade finance is in need of a makeover. Following traditional trade practices, completing a transaction can take days up to weeks. Buyers, sellers, their banks, transporters, inspectors, regulators — everyone involved needs to pass off on the trade but they all have their own forms and records to fill out. Capital is tied up as paper documents are sent back and forth, checked and rechecked, reviewed and reconciled. Delays caused by errors and manual processing can make it difficult for companies to access financing, which could cause business to grind to a halt.

Blockchain is a permanent, immutable digital record of transactions that all participants to a trade can view. This includes data such as the progress of a product as it leaves the warehouse, is loaded onto a plane, truck or ship and arrives at the receiving end. Using this shared version of the truth, trade partners can interact with greater trust. Third-party verification processes aren’t as necessary because less handling means reduced potential for errors or tampering. This can increase the efficiency with which companies access funding as well as save time and costs throughout the trade process.

Innovating global trade finance

Businesses have dealt with and overcome many sources of friction in global trade in recent years thanks to technological innovations, but many business transactions are still inefficient, expensive and vulnerable. Targeting the creation of large, global, multi-modal networks that bring transparency and trust to each step of the trade process is what makes Batavia a platform with so much potential to transform the way companies around the world do business with one another. Stay tuned to the IBM Blockchain community for updates on this and other exciting blockchain projects:

Learn more about blockchain today

Senior Client Executive, UBS Account Team IBM Global Markets, Financial Services Sector Integrated Accounts

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