Blockchain technology for international trade raises the possibility of making the process of a commercial transaction for the payment or delivery of a service more efficient while reducing risks. Its implementation on trade financing will benefit lower scale companies and more regions.
Trade financing is one of the main objectives of this technology. With the digitalization of the process, blockchain allows more secure and agile mechanisms. For this reason, in order to achieve an end to end procedure, all parts involved need to digitalize.
Usually, the traditional process requires a series of documents that extend the timeframe of a transaction, nevertheless, with a single platform, corporate clients will no longer need to sign paper application forms because digital document transactions will be much easier.
This way, blockchain will generate better supply chain service management with higher process speed and less cost for banks or other parties.
Banking institutions that participate in international trade can offer tailor-made funding for their clients. Likewise, banks will attract more companies since it will be easier to access trade funding.
The transparency offered by blockchain technology in the process will allow each party to view all steps involved from the purchase order until payment so companies can better manage their cashflow.
In order to begin using this technology, trading networks need to be created and connected to a single blockchain platform such as R3 Corda or Hyperledger Fabric. Through these networks, management workflows, client or bank reports could be securely shared in real time, leaving a digital record.
Even tough each bank is accountable for its own technology standards and business procedures, with blockchain trading networks the objective is that a single entity manages the network. Nevertheless, a trading network requires significant investment to build the infrastructure that integrates the technology systems that are already in place.
Currently some blockchain platforms exist, such as project Voltron, in which we participate altogether with other nine banks- for which we evaluate the creation of a trading network with the Corda from R3 platform for the purpose of document digitalization trading.
With trading process, digitalization we reflect our constant commitment to adopt the latest technology to optimize secure and transparent commercial transactions.