Enterprise software firm R3 and trade finance technology firm TradeIX today announced an innovative initiative focused on the overhaul of open account trade finance infrastructure. The initiative is a joint undertaking between R3, TradeIX, and twelve financial institutions including Bangkok Bank, Barclays, BBVA, Bladex, BNP Paribas, Commerzbank, CTBC Bank, ING, Intesa Sanpaolo, Shinhan Bank, Royal Bank of Scotland and Wells Fargo.
R3, TradeIX and the participating banks are developing an end-to-end open account trade finance business network which will be powered by TradeIX and R3’s Corda distributed ledger platform. The prototype will be customised to meet the needs of participants across multiple geographies, supporting the continued growth of open account trade whilst making it safer and simpler.
R3 says that this initiative aims to provide cutting-edge open account trade solutions. „These include a robust suite of trade specific APIs and technology tools, a sophisticated rules engine, and an open, standard core infrastructure for trade data, contracts, and transactions.”
„Financial institutions will be able to automate pre- and post-shipment financing and risk mitigation for corporate buyers and sellers around the world. In turn, corporate buyers and sellers gain access to light and flexible API-driven technology solutions that help simplify trade, improve visibility into trade flows, and provide access to much needed credit and risk mitigation services at critical points in the trade lifecycle. This infrastructure enables a higher degree of interoperability and is designed to integrate with existing platforms as well as R3 and other ecosystems.”, according to the press release.
The business network will also improve access to open account trade for the global ecosystem of banks, buyers, suppliers, technology providers, insurers, and other parties, such as logistics companies, that are critical to facilitating global open account trade flows.
The initial development phase involves creating standard trade finance smart contracts on a distributed ledger infrastructure. This provides secure and automated financing of supply chain using a single record for critical trade data including identities, purchase orders, invoices, shipping and logistics information, trade assets, financing activity, credit risk, and more. Following this phase, R3 and TradeIX will engage the broader ecosystem, expanding services and onboarding additional members.
David Rutter, CEO of R3, comments: “Earlier this year R3, TradeIX and a core group of R3 members teamed up to redesign the infrastructure behind open account trade finance utilising our Corda platform and the TIX-Platform of TradeIX. Existing trade finance infrastructure is in serious need of an upgrade, and this project is a big step towards the adoption of reliable, efficient and standardized processes for the entire sector.”
Rob Barnes, CEO of TradeIX, comments: “The business network provides the entire trade ecosystem with a smarter, more secure, and more transparent infrastructure that connects currently siloed parties and systems, standardizes and digitizes trade documents, data, and assets enables the convergence of trade data from physical, informational, and financial supply chains. This provides trading parties secure, easy access to rich, verified trade data, APIs, and powerful technology applications that will drive a paradigm shift in open-account trade finance.”
Ivar Wiersma, Head of Innovation Wholesale Banking at ING, comments, “In order to address emerging needs in trade finance, ING, R3 and other key members have come together to launch this initiative for open-account trade finance which enables flexible and efficient working capital finance solutions for our clients. As a member of R3 it is very rewarding to be part of this ground-breaking initiative.”
“We see this initiative as complementary with other initiatives and trade platforms. Building smart contracts to capture the SCF business logic on DLT is an essential step that will significantly boost the trade finance ecosystem. This consortium with R3 provides an excellent opportunity to work on this collaboratively.” said Marguerite Burghardt, Global Head of the Trade Competence Center, BNP Paribas.
“We are very excited about this new initiative, which has the potential to significantly boost the trade finance ecosystem,” said Bernd Laber, group executive Trade Finance & Cash Management Corporate Clients, Commerzbank. “This collaboration is our ongoing effort to constantly innovate the marketplace, whilst at the same time exploring cutting-edge technologies. Together with R3, other bank members and TradeIX, we aim to bring trade and supply chain finance business to the next evolutionary stage.”
R3 also announced that the International Trade and Forfaiting Association (ITFA) is joining the R3 network and will be involved in this project and others. ITFA is a global association for the trade receivables and supply chain finance industry with over 170 members.
Sean Edwards, Chairman of ITFA commented “We look forward to working with R3 and its members as an observer and adviser on this project as distributed ledger technology looks to change the way that world trade, and particularly receivables finance, is conducted. The digitisation of traditional trade payment instruments is a key step in modernising trade finance”.
About R3
R3 is an enterprise software firm working with over 100 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to develop Corda, its distributed ledger platform designed specifically for financial services. R3’s global team of over 140 professionals in nine countries is supported by over 2,000 technology, financial, and legal experts drawn from its global member base. R3 recently announced the successful completion of the first 2 of 3 tranches in a Series A fundraise valued at USD 107 million.
Corda is the outcome of over two years of intense research and development by R3 and its members and meets the highest standards of the banking industry, yet is applicable to any commercial scenario. With Corda, participants can transact without the need for central authorities, creating a world of frictionless commerce.
About TradeIX
TradeIX is rewiring the $8 trillion trade finance market with the TIX Platform, an open platform providing applications, technology tools, and core infrastructure for the trade finance ecosystem. The TIX Platform enables trade finance parties to more easily, flexibly and efficiently connect to the broader trade finance market, including suppliers, buyers, service providers, B2B networks, credit underwriters and financial institutions. The platform provides benefits to all trade finance parties through enhanced funding opportunities, lower cost and reduced risk.
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