R3 tackles trade financing challenges with blockchain

posted almost 6 years ago
Financial innovation company R3 and over 15 of its consortium member banks have successfully completed two prototypes that demonstrate how distributed ledger technology can address the key challenges facing the USD 45bn global trade finance industry.

The banks designed and utilised self-executing transaction agreements, known as 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. Both AR and LOC transactions are widely used methods of trade financing in global financial markets.

R3’s prototypes validate distributed and shared ledger technology as a digital alternative for trade financing that is significantly faster, more reliable and cost-effective. 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%.
Tags: news, blockchain