At the recent blockchain summit in London, some bankers spoke enthusiastically about the digital trade finance platform they are building and the cost cuts they think will be made.
At least, this is the impression left at this week’s blockchain summit in London. There, many bankers enthusiastically talked about the digital trade financing platform they are building and the cost reductions they believe will lead.
At the meeting, Citibank Chief Technology Officer Amit Varma said that it specifically describes the savings that the agency expects this technology will bring to participants in all stages of global trade, from manufacturing to manufacturing. Shipping to distribution.
Varma said it expects supply chain management costs to be reduced by 70% to 80% through the use of blockchain.
In other areas of business, by contrast, bankers have recently to work in the bow, trying to much-hyped block chain optimization commitments, as well as processing and their traditional system integration the tricky business.
But a refreshing aspect of paper-based systems such as trade finance is that there is less resistance to creaking systems.
“The blockchain is good for those that resist digitalization,” said Xavier Laurent, head of the blockchain community at French financial credit bank, French financial institution.
The final example may be trade finance.
On the other hand, in some parts of the world, this process may continue to resist digitization. Laurent said that although trade finance is global, some governments have been slow to develop and are trapped in the process of using paper for recording.
“We will have some jurisdictions and all transactions are carried out on the blockchain,” Laurent said. “But in other geographic areas, due to legal and regulatory risks, these places mean you will still use paper. ”
According to a recent report by the International Chamber of Commerce, trade finance is a big business with a global value of about $9 trillion.
However, bankers have seen room for improvement, which helps explain why they are digitizing through blockchains. For example, Sean Edwards, legal director of Sumitomo Mitsui Banking, believes that there is a $1.5 trillion potential trade finance market in parts of Africa and Asia.
Edwards, president of the International Trade Finance Association (ITFA), said that in order for these places to enter the market, what is needed is an efficient “know your customer” (KYC) system, which he calls “long tail suppliers”, that is, those most People who need finance.