FinTechBlockchainCross-border blockchain-based trade finance pilot launched

Cross-border blockchain-based trade finance pilot launched

The objectives of the pilot project are to build a digital end-to-end trade finance and supply chain finance solution via the Marco Polo network.

Alfa-Bank, the Russian financial institution and the Novolipetsk Steel Company (NLMK) – the largest steelmaker in Russia – have launched a pilot cross-border payment project via the Marco Polo international trade finance network.

The pilot, which is being carried out in co-operation with Commerzbank and German technology and engineering firm Vesuvius, aims to build a digital end-to-end trade finance and supply chain finance solution on a blockchain platform. For Marco Polo, it is the first Russian-German import-export operations financing project.

Through this pilot, the Marco Polo network based on R3 Corda allows Alfa-Bank to offer its clients a wide range of international trade finance solutions and seamless integration into the global trade ecosystem.

Marco Polo offers to the network members a set of Application Programming Interfaces (APIs) for direct interaction with ERP systems, allowing international trade participants to make payments, create irrevocable payment obligations and discount accounts receivable within a unified transparent system of interaction with partners.

Dina Merkulova, Head of Trade Finance at Alfa-Bank commented: “We launched our first distributed ledger technology in trade finance as early as 2017. Since then, corporate blockchain solutions have been considerably elaborated, and earned our clients’ confidence and proved their applicability to real business processes. Projects such as Marco Polo create added value for clients ensuring more international trade transparency and manageability thanks to integrated bank payment, finance and discount instruments.”

On behalf of NLMK Director for Treasury, Anna Sokolova added: “Our decision to take part in the pilot project was prompted by our intention to optimize the process of interaction with partners based on blockchain technology. We expect Marco Polo to ensure seamless collaboration of several sides engaged in international trade operations (banks, suppliers, insurance companies, etc.) with a flexible access to working capital financing instruments to the parties.”

Digital processing and matching of trade data

International trade is a multilateral process involving exporters, importers, logistics services providers, insurers, customs, banks and many other parties. Long-term blockchain-based solutions will make it possible to totally abandon the traditional practice of isolated paper documents mailing by post, reduce overhead cost and simplify business processes by connecting various stakeholders of trade transactions to the same network and sharing data.

Enno-Burghard Weitzel, Commerzbank’s Global Head of Trade Finance Products said: “Our international corporates show continuous interest in piloting the Marco Polo Payment Commitment together with us and banks of our global network, like Alfa-Bank. This new instrument, which is provided upon digital processing and matching of trade data in the Marco Polo network, meets our customers’ growing demand for increased speed of transaction and transparency, optimised financing, enhanced working capital management and possible integration of ERP systems.”

Christian Greving, Cash Coordinator Treasury, Vesuvius GmbH: “Integrated working capital solutions directly related to the contract, issued invoices and shipping documents definitely benefit all the parties, and our experience with Marco Polo demonstrates that core processes can really be streamlined.”

Back in March, Commerzbank completed first Marco Polo transaction pilot when the bank and Landesbank Baden-Württemberg (LBBW) successfully executed the necessary data transfers to complete two commercial transactions via Marco Polo’s blockchain-based trade finance network.

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