The merger between and Batavia could be a sign of a glut of blockchain projects in the trade finance space. Should the industry expect more consolidation? Sanne Wass investigates.


It was bound to happen, some said. When blockchain platforms and Batavia announced in October that they would merge, many industry players were unsurprised. After all, the news was preceded by three years with an immense amount of blockchain announcements, proofs of concepts, consortia, startups and partnerships. The industry sentiment was that surely, not all would survive.

The decision to bring Batavia under the brand made sense in many ways. Both were built by IBM, based on the Hyperledger Fabric blockchain framework and sought to digitise open account trade finance.

Batavia was one of the first blockchain initiatives in the trade finance space, having first announced a proof of concept at Sibos in 2016. Behind the wheel was UBS, with Commerzbank, Bank of Montreal, Erste Group and CaixaBank subsequently joining., meanwhile, was a later initiative, but one that quickly drew the backing of some of the world’s biggest trade finance banks – Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale and UniCredit – and which moved fast to establish an independent legal entity that could bring a production-ready solution to market.

Joining forces posed both a business and a market opportunity, explains Parm Sangha, IBM’s global business services blockchain leader.

“The base principle of was competing banks coming together to co-create a new platform based on trust,” he says. “If you’ve got competing banks collaborating, then from a business strategy point of view, it didn’t make sense to have a competing network as well. That was the first business level driver. The second was technology. Why invest twice in creating a platform that’s based upon the same technology? Why would you want to fragment that and reduce the negotiating power of a pan-European network?”

As a result, project Batavia has now been closed down and three of its member banks – CaixaBank, Erste Group and UBS – have become shareholders of instead.


Many platforms, same use cases has since become one of the first blockchain-based trade finance platforms to go into production: as of March 2019, 14 banks have signed licences to commercially use it.

But it is not alone in its attempt to modernise old-fashioned and paper-heavy processes in trade finance. “By our count, there are more than 20 trade finance consortia and industry initiatives that are currently underway in the market, many of them involving the same entities and tackling similar products and processes,” says Dani Cotti, managing director of TradeIX’s centre of excellence, banking and trade.

TradeIX is itself behind the blockchain project known as Marco Polo. Built on R3’s Corda, it now has 17 banks signed up and is scheduled to go live in the second half of 2019. In Hong Kong, meanwhile, 12 banks have been working with fintech firm OneConnect to build eTradeConnect, based on Hyperledger Fabric. Both, like, are digitising open account trade finance.

Other projects are addressing challenges around traditional trade finance products. The Voltron blockchain platform, for one, has been drawing great attention since May 2018, when HSBC and ING completed the application’s first live letter of credit transaction, reducing transaction time from the standard five to 10 days, to 24 hours. It is built on Corda.

Then there’s the komgo platform, which is based on Quorum blockchain technology. It also facilitates the letter of credit as one of its core products, albeit focusing purely on commodities.

Singapore-based LC Lite, meanwhile, provides an alternative letter of credit concept, where importers and exporters establish smart contracts which digitally replicate the LC instrument.

At the end of 2018, most of these blockchain initiatives had remained in the proof of concept or piloting phase. As they move into production, 2019 may well pose the next real test. Will they all survive?

“We have been down this journey for the last three to four years, where we see new platforms come up almost every quarter, which are solving similar kinds of problems, especially in open account trade,” said Huny Garg, head of trade and supply chain at Swift, speaking at GTR Mena 2019 in February.

“I would like to see at some point some consolidation there. Sometimes in the same region, exactly the same corporates and banks are on the same platforms and it becomes impossible for corporates as well as banks to differentiate and choose between those platforms. Some amount of consolidation in the next 12 to 24 months is necessary for most of them to succeed. Otherwise we will see that only the strongest will survive.”

While Swift itself has mostly remained on the sidelines of the blockchain race, it has recently partnered with R3 to link its global payments innovation (gpi) service with Corda-based e-commerce and trading platforms.

Garg’s views seem to be shared amongst his blockchain counterparts. “Consolidation is always the sign of maturity,” explains Cotti at TradeIX. “It’s in the nature of the evolution of the blockchain market that it will happen, and there will probably be more. There are so many initiatives out there – and many good initiatives. Some are cross-border, some are more domestic. It’s likely that more consolidation will happen.”

At R3, meanwhile, the firm’s global head of research and trade Alisa DiCaprio emphasises the fact that while many of the applications look similar, consolidation is not necessarily the outcome the industry is looking for.

“In general, when you have a new space, of course they won’t all survive,” she says. “But whether we actually need consolidation or not, I think it’s too early to say. Competition is important at this stage of innovation. People see three different apps that all appear to have similar functionalities. But in fact, they each have very different commercial models and governance frameworks, and so we’d expect that they would attract different types of firms and different sizes of banks. That’s why innovation doesn’t happen in monopolies. We want to have lots of different players in this space.”


Consolidation in the world of trade

Other experts point to the fact that trade finance platforms will be forced to look outside of their traditional remit.

“It’s now more than trade finance,” says IBM’s Sangha. “There is going to be consolidation, but it’s more a case of new methods of collaboration in global trade as opposed to just consolidation for trade finance networks.”

The wider trade ecosystem has seen an even greater boom in innovation over the past few years. In logistics, for example, the likes of TradeLens, Wave, CargoX and, more recently, the Global Shipping Business Network are all using blockchain technology to digitise and automate the shipping documentation and processes.

TradeLens is the initiative that has garnered the most attention, being built by Maersk and IBM and having already attracted more than 92 participant organisations. The platform enables the global logistics industry to interact, access real-time shipping data and exchange trade documentation such as the bill of lading.

In the insurance space, too, projects like B3i – an acronym for the Blockchain Insurance Industry Initiative – has brought together 13 insurance and reinsurance companies to improve the way insurance data, claims, capital and payments are disclosed, automated and managed, using the Corda platform.

A wide range of technology firms are also using blockchain for supply chain ‘track and trace’. IBM’s Food Trust blockchain programme, for one, has seen the tech giant work with leading retailers, suppliers and growers to track individual food products along the supply chain. It is also working with Ford on a platform to trace and validate ethically-sourced minerals. Provenance, BlockVerify and Everledger are examples of other companies operating in the same space.

On the payments side of the business, challengers such as Ripple and IBM’s WorldWire are using blockchain-based assets to offer cross-border payments alternatives to the decades-old Swift.

Elsewhere, a range of platforms are growing strong in procurement, with the likes of Tradeshift helping companies to digitalise and streamline their invoicing and supply chain payments.

Exactly how all these innovations in the world of trade could eventually integrate is now a priority for the big industry vendors.

“The comments I get most of the time are around scale and other services,” says R3’s DiCaprio. “All of the platforms are doing trade finance, but your customers want more than trade finance. They also want supply chain finance and trade credit insurance and other things. Does your platform have the ability to plug into additional solutions?”

These new demands are also being felt at IBM. “Back in 2016, 90% of our conversations were with financial services institutions,” Sangha says. “Now that’s gone down to 50%. The rest is with other industries, where you get the movement of goods and documents. So IBM’s role is evolving to now convening and getting other industries and networks together. That’s something I see increasing in 2019: people start going beyond their shores.”

At, the company’s now former COO Roberto Mancone has been very open about his wish to collaborate with other solutions, listing TradeLens, Tradeshift and B3i as prospective partners.

“If you could combine as a trade and trade finance platform with other platforms which are digitising logistics or providing procurement or instant insurance, for example, it would create value for the customer. These are partnerships I would like to see happening in the future because it is definitely beneficial for the client,” he told GTR before leaving the company in April.

Certainly, the trade finance blockchain ecosystem will not look the same a year from now. 2019 may well see some platforms merge, and others work together. Some may decide to change technology vendor or blockchain framework. Others may not even be successful in going live.

“Today there are many platforms in the market,” Mancone said. “Not all of them will be winners, for sure. 2019 is still the year where some platforms will try to go into production. Those that will not be able to go into production in 2019, which means two years after they started the idea, they will have to make a decision.”