R3, the development company behind the Corda blockchain, has worked with over 70 companies to bring trade finance onto the blockchain.
The trial, apparently the largest open-account use case of blockchain for trade finance, was successfully carried out using the Marco Polo platform, joint-led by R3 and TradeIX.
According to a recent press release by Marco Polo, the trial is also the largest use of the Corda blockchain to date, testing the boundaries of what’s possible for the network.
R3 built Corda as a permissioned blockchain protocol which offers distributed ledger technology to private firms and organisations.
Like it’s competitor Hyperledger, Corda has attracted a huge number of companies who don’t wish to transact on a permissionless ledger like Ethereum.
The Marco Polo trade finance platform is built on top of Corda and was launched in 2017. The platform aims to make trade finance deals, financing, and settlement quicker and more transparent for all parties.
In April, it was announced that German banks BayernLB and Helaba had joined the likes of NatWest and BNP Paribas on the Marco Polo platform to provide financing for accounts receivable or factoring.
Factoring financing is among the most common forms of trade finance, whereby companies receive a cash sum for the sale of accounts receivable to investors. The practice helps companies to manage their credit risks and improve liquidity.
Over 70 companies in 25 jurisdictions joined the trial, with over 340 individual participants from a range of companies including German car manufacturer BMW and major Japanese financial holdings firm SBI Holdings.
R3 also worked with a range of traditional banks and financial institutions to finance the deals, including Tokyo-based Sumitomo Corporation, German trade finance factoring firm SüdFactoring, and the Saudi British Bank.
The trial focused on delivering working capital for accounts receivables through deals developed by TradeIX.
Together with their partner organisations, over 700 trade financing deals were facilitated through the platform at a fraction of the cost normally associated with factoring deals.
Executive director of SüdFactoring, Marius Leeb, said of the trial:
“We are very proud to be the first German factoring company which has been involved in the largest trial of the Marco Polo Network. We look forward to continuing having a deeper discussion and insights with the Marco Polo Network members based on a revolutionising trade finance technology.”
The press release claimed that on average, new users of the Marco Polo platform required just one day of platform training to get up and running, which shows how instrumental blockchain could be in transforming the huge trade finance industry.
To find out more about how blockchain can revolutionise trade finance, read here.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.