R3 Applies Blockchain Technology to Trade Finance

R3, the financial innovation company, and over 15 of its consortium member banks have successfully completed two prototypes that demonstrate how distributed ledger technology can address the key challenges facing the USD 45bn global trade finance industry. Some of the participants included Barclays, BBVA, BNP Paribas, Commonwealth Bank of Australia, Danske Bank, ING Bank, Intesa Sanpaolo, Natixis, Nordea, Scotiabank, UBS, UniCredit, U.S. Bank and Wells Fargo.

Participating banks designed and utilised smart contracts on R3’s Corda distributed ledger platform to process accounts receivable purchase transactions, also known as invoice financing or factoring, and letter of credit transactions; both transactions styles widely used methods of trade financing in global financial markets. Traditional processes in this area are mostly paper-based and prone to risk and fraud as well as being time consuming. It has come under further threat as buyers and sellers have become able to communicate more easily and access an abundance of information and data about each other, providing greater legal certainty.

 

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