By Staff Writer
A global trade finance initiative that runs on R3’s Corda blockchain platform has completed a groundbreaking six-week trial which saw over 50 banks and corporations participate in a transaction that spanned across 27 countries, according to a statement by R3.
The move is seen helping revive the popularity or at least stem its decline of Letter of Credits as a financing instrument in global trade.
The Voltron initiative has completed global trials that saw over 50 banks, including the world’s largest such as Standard Chartered, Societe General and Commerz Bank, as well as corporates participate in the simulation of multiple digitized Letter of Credit, often known as LCs.
Powered by blockchain, Voltron cuts the time it takes to complete the process of paper-based Letter of Credit from 5-10 days to under 24 hours. 96% of participants in the trial said Voltron will accelerate their LC process, improve efficiencies and reduce cost, the statement said.
The trial was delivered by a partnership of Bain, CryptoBLK and R3 on Microsoft’s Azure cloud platform.
Traditional trade finance processes are largely paper-based, time-consuming and prone to risk.
According to a survey of trial participants, 86% of firms believe such inefficiencies are increasingly becoming ‘intolerable’ for both corporates and banks. As a result, 61% said they are likely to move trade flows to ‘open account’, a far more risky option for exporters.
The latest experiment trial builds on a number of successful live transactions on Voltron in 2018 and earlier this year. The transactions demonstrated the improved speed and reliability of LCs.
The platform “will replace the complex links and networks involved in the trade finance market by providing a shared and synchronized database of transactions between businesses across the world,” the statement said.
“The digital alternative is significantly faster, more reliable and cost-effective than current paper-based systems, reducing fraud risk and removing time-consuming reconciliation processes by providing a single, immutable record of a trade,” it added.
R3 is an enterprise blockchain software firm working with a broad ecosystem of more than 300 members and partners across multiple industries from both the private and public sectors to develop on Corda, its open-source blockchain platform, and Corda Enterprise, a commercial version of Corda for enterprise usage.
Voltron is amongst the world’s largest blockchain in trade consortiums. The others are Marco Polo, Batavia, we.trade and Hong Kong’s government-led trade finance consortia, some of which run on IBM’s HyperLedger fabric.
