Multi-bank financial software consortium R3 has teamed up with digital trade finance specialists TradeIX to launch a new, open account business network, underpinned with distributed ledger technology.
The venture will cover a dozen financial institutions, with potentially significant efficiency gains on the horizon for corporate trade finance deals.
As R3 announced on 26 September, “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 life cycle.”
Interoperability is a cornerstone of the network’s infrastructure, which is capable of integrating with bank’s existing platforms, as well as prior R3 software offerings and other ecosystems.
Another key feature is access: the network will improve connections between the global sprawl of banks, buyers, suppliers, technology providers, insurers and other parties – such as logistics firms – that are crucial for facilitating open account trade flows.
R3 CEO David Rutter said: “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 standardised processes for the entire sector.”
TradeIX CEO Rob Barnes explained: “The business network provides the entire trade ecosystem with a smarter, more secure and more transparent infrastructure that connects currently siloed parties and systems, standardises and digitises trade documents, data and assets, [and] 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.”
R3 has unveiled the network less than two months after announcing a trade finance app designed to streamline the processing of sight letters of credit.
The 12 institutions involved in the network are Bangkok Bank, Barclays, BBVA, Bladex, BNP Paribas, Commerzbank, CTBC Bank, ING, Intesa Sanpaolo, Shinhan Bank, Royal Bank of Scotland and Wells Fargo.
R3 also announced that the International Trade and Forfaiting Association – a leading advocacy group for supply chain finance players – is joining the consortium and will be involved with developing the new network.