A consortium of seven of Europe's largest banks have selected IBM to bring blockchain-based trade finance to small and medium enterprises. The Digital Trade Chain Consortium consists of Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit.
IBM Blockchain, powered by Hyperledger Fabric, is designed to simplify and facilitate domestic and cross-border trade for SMEs in Europe, helping to increase overall trade transaction transparency, said a statement.
The Digital Trade Chain solution will run in the IBM Cloud and is designed to connect the parties involved in a trade transaction, both online and via mobile devices, and simplify trade finance processes by managing, tracking and securing domestic and international trade transactions.
Rudi Peeters, CIO, KBC on behalf of the Consortium, said: "To make the Digital Trade Chain network a reality and enable it to serve potentially thousands of the consortium's banking clients, we turned to IBM in enterprise blockchain to help us quickly bring this highly scalable system into production. Their blockchain and banking industry expertise will help us create a new platform for small and medium businesses in Europe that can enable them for faster, easier and cheaper trade transactions."
According to the World Bank, 50% of SMEs do not have access to formal credit. By addressing the financing gap of SMEs, a traditionally under-served market segment, the solution is anticipated to help open new revenue streams and initiate new trading relationships and foster trade growth.
The platform will also increase access to financing by infusing cross-border trade transactions with accountability and transparency. It helps equip SMEs to initiate trade with new partners domestically or in other European markets, promote accountability in transactions, gain access to capital and contributes to reducing some risk. Everything is made digital from order to settlement, and trading partners can track and trace transactions as they are processed.
Marie Wieck, general manager, IBM Blockchain, said: "In working with hundreds of clients around the world on a diverse range of blockchain projects, trade finance has emerged as one of the strongest use cases for the technology. By addressing the SME market, which faces challenges in data sharing and access to capital, the Digital Trade Chain Consortium is pioneering a unique blockchain solution with the potential for widespread impact."
The Digital Trade Chain is expected to go into production by end of 2017. The consortium started in January 2017 with seven European banks and is expected to grow to include additional banks from other countries and as well as trading partners such as shippers, freight forwarders and credit agencies.