09/10/2021, 23:32 Blockchain and trade finance - Blockchain Pulse: IBM Blockchain Blog

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Blockchain and
trade finance
March 8, 2021 | Written by: Parm Sangha

Categorized: Banking and financial markets | Blockchain explained | Blockchain in financial service

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According to the 2020 Global Trade Survey fro
Commerce, trade and trade finance are in a sta
to COVID-19. While many banks surveyed expr
related declines in trade flows and revenues, th
and working from home are hastening the shift
including blockchain.

Fifty-four percent of banks surveyed say that tr

blockchain, digital trade and online trade platfo
development and strategic focus in the near te
growth. More than 50 percent also agreed that a growing number of document types used in trade

Moving forward with digitizing trade finance requires cooperation between organizations that are n
IBM Blockchain Platform solution for trade finance and our participation in building the we.trade d
proven that banks (and indeed any competitor in any industry) can collaborate successfully and re
business digitally, to their mutual benefit.

Open new corridors of trust for new trading partnerships

The resulting blockchain-based trade network is designed to improve the trade finance lending pro
markets with new products, while reducing risk and streamlining cross-border trade for buyers an
and expand into new countries.

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09/10/2021, 23:32 Blockchain and trade finance - Blockchain Pulse: IBM Blockchain Blog

Proven benefits of a blockchain-based solution for tr

By participating in a blockchain-based platform for trade finance, banks can:

• Pursue new revenue streams through new financing products and alternatives to letters of cre

• Offer banking services to small and medium enterprises (SMEs) and companies that would tra

• Gain deep insights into client financial positions and transaction histories

• Reduce operating costs by digitizing slow and cumbersome paper processes

• Employ blockchain security attributes to demonstrate greater visibility and control of their tran
affecting the bank’s capital adequacy position

• Speed financing approval processes and trading cycles

Buyer and seller companies that use the platform can:

• Access trade finance products and services offered by participating banks more readily than th

• Reduce the risk of non-payment or late payment by a new buyer

• Track all steps in a trade deal end-to-end

• Expand reach and grow business through access to global markets

• Speed business processes with digitization and automation

Blockchain and trade finance: How it works

We have a replicable solution built on the IBM Blockchain Platform that enables individual banks,
organizations to digitize trade finance and build an ecosystem that connects buyers and sellers —
customers — In a seamless and secure trading environment.

Distributed ledger technology (DLT) makes it possible for documentation to flow transparently yet
companies and other network participants like Insurance companies. All transactions are immuta
a timestamp and unique cryptographic signature. Everyone with the right permission can access th
complete transparency, which helps increase trust and prevent fraud.

A self-governing rulebook defines how banks and traders participate to conduct business, as well
management. Smart contracts capture the codification of the commercial and shipping terms of ag
specified conditions are met, such as shipment of goods, the smart contracts trigger notifications

Through a simple user interface, companies can apply online for bank-guaranteed payment or invo
process simplifies transactions and reduces costs for all parties.

Banks collaborate to simplify cross-border trade wit

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09/10/2021, 23:32 Blockchain and trade finance - Blockchain Pulse: IBM Blockchain Blog

Founded by a consortium of major banks in Europe plus IBM Blockchain, the we.trade platform co
insurers and logistics organizations. The network simplifies cross-border trading, fosters greater t
new markets for all participants. Live since January 2019, it has grown to include 16 banks across
volumes growing rapidly and valued at millions of EUROs.

we.trade streamlines the trade finance lending process, reducing friction and supporting companie
expand into new markets. The platform helps automate many of the processes around trade finan
access to insurance, credit rating and logistics services.

Buyers and sellers join we.trade via their participating banks. Once on the network, traders can ini
payment process and apply for bank payment guarantees and financing — all through a simple onl
search the network to discover new trading partners, all of which have passed their banks’ Know Y

The fast track to a trade finance platform: Build on o

assets
This trade finance platform is both replicable and extensible. Because we have built it already for e
solution quickly for other consortiums of banks and partnering companies. Assets such as rules fo
workflows, templates for user interfaces, and APIs for connecting with existing systems of record
particular business relationships and potential participants.

The platform is also extensible. Once your solution is in production, you and your partners can gro
banks, expanding into new markets or incorporating other supply chain participants like logistics,
and offer new services to buyers and sellers. Platforms can also be interconnected with other exis
extend reach.

By taking advantage of an existing customizable solution and the expertise of IBM Blockchain Serv
from design to working pilot in as little as three months. After applying learning from the pilot, you
participants to the network.

The solution itself is built on the IBM Blockchain Platform, which is IBM’s commercial distribution
source Hyperledger Fabric. Each party in the blockchain network can maintain their data on the IT
vendor of their choice. The platform is GDPR compliant, so it is ready to support global business re

IBM Blockchain Services can help you join we.trade, or talk to us about how we can replicate a sim
finance solution for your bank or consortium of founders. We can also help you standardize rules o
your platform will be governed.

This use case telling the story of trade finance will be followed up by more examples of how blockch
various industries to help solve real world problems. Be sure to read our recent articles on letters of
reconciliation and digital ticketing and upcoming articles, or schedule a free one-on-one consultatio
from this solution.

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09/10/2021, 23:32 Blockchain and trade finance - Blockchain Pulse: IBM Blockchain Blog

Building on the leading blockc

The leading open source blockchain for business platform
driving growth.

Learn about IBM Blockchain Platform

Parm Sangha
Executive Partner - Global Business Services

blockchain digital solutions global trade survey hyperledger fabric

IBM Blockchain Platform parm sangha services solution

Use case we.trade

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