R3 and 15 member banks of its consortium have completed two distributed
ledger prototypes that it claims prove the usefulness of the technology in
addressing USD FX trading issues.
The banks designed and utilised self-executing transaction
agreements – so-called smart contracts -on R3’s Corda distributed ledger
platform to process accounts receivable (AR) purchase transactions, also known
as invoice financing or factoring, and letter of credit (LOC) transactions, R3
says in a statement Wednesday.
Traditional processes surrounding trade finance are largely
paper-based and are therefore time consuming and prone to risk and fraud, it
On the other hand, R3’s prototypes are designed to validate
distributed and shared ledger technology as a digital alternative for trade
financing that is “significantly faster, more reliable and cost-effective” it says,
adding that “estimates suggest that such technology has the scope to reduce
operational and compliance costs of paper-based trade financing by 10 to 15%
and provide a platform for banks to grow revenues by as much as 15%”.
Banks participating in the trial include Barclays, BBVA, BNP
Paribas, Commonwealth Bank of Australia, Danske Bank, ING Bank, Intesa
Sanpaolo, Natixis, Nordea, Scotiabank, UBS, UniCredit, US Bank and Wells Fargo.