IBM Chosen As Banks’ Blockchain Partner
June 27 th, 2017 – Seven big European banks have selected IBM to build their blockchain-based platform with a goal of making trade finance transactions simpler and more streamlined for SMBs.
HSBC and Deutsche Bank are among the very recognizable names in banking signed on with IBM. Société Générale, Natixis, Rabobank and Unicredit have also signed on to be part of the “Digital Trade Chain Consortium.”
IBM, as of last year, had identified trade finance as a top area where the blockchain could actually have an impact on the ecosystem. In this application, the blockchain tech allows for the automatic generation of electronic record-keeping and transaction-processing systems on a third-party-free secure network.
As of today, trade finance is a paper-intensive world where wait times are long (often a month or more), costs are high (international courier services are costly) and document fraud is a constant risk.
“What we will have is a platform to bring buyers and sellers together and to make trade transactions very transparent from…the moment that a purchase order is issued up until payment,” said Hubert Bdenoot, general manager for trade finance at KBC, one of the banks in the consortium.
“The first service that will be available for buyers and sellers is financing and risk coverage, and it will also include a track-and-trade system so that buyers and sellers can follow the physical transfer of the goods,” he told Reuters.
“There are over 20 million SMEs in Europe, and they provide around 85 percent of the jobs as well, so it’s a critical part of the economy and so anything that can facilitate growth in the SME community is going to help a lot,” said Keith Bear, vice president for financial markets and head of blockchain at IBM.
But not everyone is quite so sure about this effort’s inherent appeal to SMB owners — KBC’s Bdenoot, for example, has his doubts.
“I don’t think this is going to be something that enters the market and then all of a sudden half of the SMEs are on the platform — I don’t think that’s realistic,” he said.
He did, however, note that he expects to see the Digital Trade Chain Consortium platform generate some growth.
Written by PYMNTS
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