Citigroup’s Global Head of Commodity Trade Finance, Kris Van Broekhoven, has revealed how banks are using blockchain technology to modernise the commodity trading market.

Komgo provides efficiency

Citi uses the Ethereum-based Komgo platform, which has surpassed more than $1 billion in financing since its launch in 2018.

According to Van Broekhoven, who was interviewed by Consensys, Komgo’s goal is: “To develop a one-stop shop for commodity trade finance offering speed, efficiencies, and a first-class user experience to the industry.”

Komgo reportedly reduces the time to issue a digital letter of credit from an average of 10 days to one hour.

He added: “Citi chose to join Komgo because, first of all, we pride ourselves in being a leading digital bank”.

“Second, we are one of the largest global trade finance banks in the world, so we do take trade digitisation very seriously.”

Leading digital banks like @Citi are partnering with #ConsenSys to unlock global trade with #Ethereum. #EntEthIsHere https://t.co/2MVqPR2xdR pic.twitter.com/jseHlIJsVD

— Consensys (@Consensys) March 10, 2020

Van Broekhoven goes on to explain how using a blockchain-based platform ensures the bank’s clients enjoy a better experience.

“Banks and clients want a simple and elegant user experience that comes with digital tools.

“They also want us to find efficiencies to reduce costs, speed-up turnaround times and reduce fraud”.

“Our involvement in Komgo has helped us to learn about blockchain, about what drives users to change their behaviour, and we pass these learnings on to our clients.”

Blockchain use cases

Blockchain technology has been touted as a potential solution to numerous industries ranging from supply chains to federal data tracking, but so far it has only made a meaningful impact on the finance sector.

The hype surrounding blockchain technology in 2017 now seems to have subsided, with spectators experiencing a change of heart due to the exponential loss in value across the majority of ICO projects.

The issue is that a lot of projects in 2017 pledged to revolutionise the world with blockchain technology,  subsequently resulting in a rise of investment in the industry.

However, as cryptocurrencies began to tumble in 2018 so did the promises made by company executives, which created a level of distrust amongst consumers and investors.

So far there has only been a handful of companies that have gained traction, with the majority of projects slowly fizzling out – drawing clear comparisons to the dot.com boom in the late 90’s.

The potential launch of Facebook’s Libra and JP Morgan’s bespoke cryptocurrency demonstrates how blockchain can improve efficiency within the banking industry.

But on the whole, blockchain companies need to begin making an impact on other sectors in order for the technology to be taken seriously by the masses.

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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.