Standard Chartered to pilot blockchain-powered smart guarantees for trade finance

The bank aims to digitise the previously paper-intensive process.

Standard Chartered has tied up with Siemens Financial Services and digital trade provider TradeIX to roll out client pilot that will create an end-to-end blockchain-based smart guarantees in trade finance.

The bank claims that this is the first blockchain pilot that digitises the paper-intensive process from initiation of bank guarantee to the claim handling stage, according to a media release.

Also read: Hong Kong to launch blockchain-powered trade finance platform in September

“This is an industry-defining solution which we believe will transform the way guarantees are issued and processed in the UAE. Siemens Financial Services has been a key partner for us to build and develop this pilot on the distributed ledger and we believe that this technology can further be harnessed by the Dubai Smart City initiative,” Motasim Iqbal, head of transaction banking UAE, Standard Chartered, said in a statement.

Also read: Indian banks team up in blockchain-powered trade finance network

Unlike letters of credit which usually involve multiple parties, Standard Chartered claims that a commercial bank guarantee is easier to digitise. The solution will enable Siemens to digitise its guarantee process for customers with large transaction volumes in the future, spanning issuance, amendments and claims.

The pilot started in March 2018 and will be fully completed later this year. The proposition is based on auto-executing smart contracts, leveraging the Corda Distributed Ledger and application layer provided by TradeIX.

The bank is the latest to capitalise on the growing shift of trade towards Asia-Pacific Median trade transaction volume reported in APAC hit a total value of $2.15t nearly double the level processed in North America, and about 10 times the median volume in Africa, according to the International Chamber of Commerce.

Asia-based corridors are expected to grow between 4% to 9% a year from 2017 to 2026 to represent more than a third (38%) of global trade flows by 2020 whilst the US share is expected drop to 8.7% over the same period as emerging regions like Asia and Middle East with high levels of documentary trade take center stage.

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