By Staff Writer
Global banks are rapidly moving ahead to experiment with blockchain in various applications, notably in trade finance and supply chain. Standard Chartered has announced that it has successfully piloted a transaction for PTT Group, PTT International Trading Pte Ltd and IRPC Public Company Limited, by digitizing the first cross-border Letter of Credit (LC) issued over the Voltron blockchain platform in the oil industry.
Due to the significant cargo value, oil companies are often reliant on LCs as a form of short-term trade finance. Yet, this process is paperwork-intensive and requires up to five days for the delivery of these documents.
The pilot involved the shipment of an oil product from Thailand to Singapore. Standard Chartered was able to digitize and simplify the end to end exchange of information between all parties in the transaction on the Voltron platform, including the issuance, advising and negotiation of LC and presentation of documents.
As the documents were sent electronically, all trade participants can view real-time updates on the progress of the transaction. This resulted in a significant reduction of processing time to less than 12 hours, in addition to achieving greater transparency and cost efficiencies across the supply chain.
“This pilot transaction marks the first of many that will follow from our participation with Voltron to digitise trade and enhance the client journey,” said Samuel Mathew, global head, documentary trade product management at Standard Chartered Bank.
Miss Supasachi Hongsinlark, managing director, PTT International Trading said the new system will provide more “visibility to monitor trade finance flow in real-time, which will improve transparency and credibility for the trading process and thus strengthen the relationship between our partners and stakeholders in the long run.”
The bank did not say when the new initiative will move into commercialization but it is looking forward to bring it to production stage soon, said Plakorn Wanglee, president and chief executive of Standard Chartered Bank Thailand.
Standard Chartered is one of the founder members of Voltron, a blockchain-based open industry platform to digitally create, exchange, approve and issue Letters of Credits.
It continues to deliver a differentiated offering to connect clients and their ecosystems through innovation and co-creation, and most recently announced the launch of Trade AI Engine, a joint solution developed in partnership with IBM to enhance the client experience in trade document processing through increased operational efficiency and strengthened operational control.
Earlier this week, the Bank also completed its first joint deep-tier supply chain financing transaction with Linklogis for Digital Guangdong, a joint venture between Tencent, China Unicom, China Telecom and China Mobile to bring digital government services to the local residents (see here).