Settling international trade finance via distributed ledgers
Sector: Tertiary sector · Industry: Banking and financial services · Organisation: Bangkok Bank, Commerzbank · Maturity level: Pilot
Bangkok Bank and Commerzbank conducted an international trade finance transaction between Asia and Europe using the DLT-based Marco Polo network. The initiative focused on testing open-account trade finance processing using shared distributed ledger records to reduce friction. By synchronizing transaction documentation digitally, the participating financial institutions aimed to accelerate settlement and cut manual operational overhead.
Documentation status
- Project status: Pilot (as of 28 March 2019) — Successful completion of the bilateral pilot project between Asia and Europe on the Marco Polo Network.
- Evidence: Evidence medium
- Editorial review: pending
Description
Bangkok Bank and Commerzbank demonstrated within this pilot project how cross-border trade finance between Asia and Europe can be digitalised. In traditional foreign trade, open-account transactions often require lengthy reconciliations and time-intensive exchange of physical documents. By using a shared distributed ledger platform, trade data could be synchronised directly between the banks, significantly speeding up processes.
The pilot project used the Marco Polo Network, built on the enterprise DLT platform R3 Corda, to automate trade finance between companies and banks. The focus was on digitalising payment obligations and trade data, which were previously often sent by post or inconsistent electronic formats. The partners involved, including Bangkok Bank and Commerzbank, conducted real transaction processes to test the practicality of data reconciliation and automated payment approval. Corda's architecture prevented uninvolved parties from accessing confidential business parameters. The successful execution demonstrated the potential of distributed ledger structures to significantly reduce processing times in global corporate banking.
Perspectives
B2B — organisations perspective
Companies and cooperating banks benefit from direct, tamper-proof data exchange without time-consuming intermediate steps. This reduces liquidity risk in foreign trade and improves working capital management for both trading partners.
Employees perspective
Trade finance department staff are relieved from repetitive document matching. They primarily monitor automated approval processes and resolve remaining data discrepancies digitally.
Benefits
General
- Accelerated processing times in cross-border trade finance
- High data security and confidentiality through bilateral peer-to-peer communication
- Reduced administrative effort through digitalised reconciliation processes
B2B — organisations
- Faster release of liquidity for export and import companies
- Reduced error rates in invoice and freight data verification
Employees
- Avoidance of manual data entry from paper documents
- Focus on exception cases and customer-oriented consulting
Challenges
General
- Requirement for broad consortium formation to achieve significant network effects
- Need for uniform legal frameworks for DLT transactions in foreign trade
B2B — organisations
- Integration effort into established IT and ERP landscapes of corporate clients
Employees
- Adjustment to fully digital workflows without familiar paper documents
Technology foundation
R3 Corda was chosen as the underlying distributed ledger technology because the platform is specifically designed for regulated financial institutions and shares transaction data only between the directly involved parties. This ensures strict confidentiality and banking-compliant data protection without global data distribution.
Implementation examples
Marco Polo Trade Finance Pilot Bangkok Bank and Commerzbank
Elimination of delays and manual efforts in international trade finance through digital peer-to-peer data synchronization.
Bangkok Bank and Commerzbank processed a pilot transaction in open-account trade via the Marco Polo DLT network.
As part of the cooperation, Bangkok Bank and Commerzbank tested the processing of a cross-border trade finance transaction between Asia and Europe. The transaction was based on the Corda technology of the Marco Polo network to synchronise trade agreements and payment obligations. The pilot project successfully demonstrated that lengthy manual reconciliations in foreign trade transactions can be efficiently automated through secure distributed ledger infrastructures.
Avoidance of media discontinuities, ensuring confidentiality between the involved banks, and acceleration of approvals.
Tags
Trade finance, Trade Finance, R3 Corda, Open Account, DLT