Barclays Bank and accelerator graduate Wave have executed a live Letter of Credit transaction between Ornua – the Irish Dairy Board – and Seychelles Trading Company on a Blockchain system.
Wave is one of eleven companies to have come through the Barclays Accelerator programme in New York last summer, and has since been working with the bank in the UK and South Africa to explore various use cases for its technology.
The Wave platform uses distributed ledger technology to ensure that all parties can see, transfer title and transmit shipping documents and other original trade documentation through a secure decentralised network, eliminating many of the current inefficiencies in international trade.
Barclays believes the system could speed up trade transactions, reduce costs for companies around the world and reduce the risk of documentary fraud. The bank says it has identified substantial direct cost savings that can be made on courier costs alone using the Wave system, and it could also bring down the time taken to complete an end-to-end trade finance transaction from days to a few hours.
Baihas Baghdadi, global head of trade & working capital at Barclays, says:
“One of the biggest headaches in global trade currently is the vast movement of paper required to facilitate transactions, with multiple organisations in the chain. That is why we’ve been very keen to partner with Wave in using Blockchain technology to save time and money for our clients, and potentially transform trade finance for businesses around the world.”
The paper-intensive trade finance business has been identified as a key area in which a combination of distributed ledger technology and smart contracts can be used to overcome market inefficiencies.
Barclays says it is seeking to involve other banks in supporting adoption of Wave’s system, with the hope that this can develop into an industry wide improvement in how trade documentation is managed.
However, Wave is not the only game in town. Last month, Bank of America Merrill Lynch, HSBC and the Infocomm Development Authority of Singapore claimed success in demonstrating the application of distributed ledgers to replace paper-based Letters of Credit in trade finance transactions.