Mizuho has successfully completed a trade transaction between Australia and Japan using blockchain technology.
Japanese conglomerate Marubeni Corporation and Sompo Japan Nipponkoa Insurance were involved in a deal that was completed within two hours, as opposed to conventional trade transactions, which take multiple days to complete. Marubeni’s entities in Japan and Australia were the buyer and seller, respectively.
The Japanese bank says that using blockchain allowed it to save on labour costs through document digitisation, while it also allowed it to increase transparency. All trade-related processes, including the issuance of a letter of credit and the delivery of all trade documents, were completed entirely on the blockchain.
Mizuho has already used blockchain to trial currency settlement and it worked with IBM on this trade finance pilot, which was developed on the Hyperledger Fabric platform.
However, Mizuho issued a note of caution, which speaks to some of the issues in achieving critical mass for blockchain in the trade industry, raising two issues with the transaction. The bank’s release reads: “It is not possible to transmit trade transaction information in digital blockchain/distributed ledger technology (DLT) format to parties who do not use the platform; transactions must be conducted as before.”
Adding: “Enabling the transmission of the wide variety of information necessary for trade transactions will require standardising the information for blockchain/DLT at an international level.”
It aims to continue to explore the technology to “offer technologically sophisticated, client-focused services going forward”.
As well as being a member of the Hyperledger consortium, Mizuho joined the R3 DLT consortium in October 2015. When it announced that the trade finance transaction was in the works in April this year, its chief digital innovation officer, Daisuke Yamada, said that it would “work aggressively towards expanding our portfolio of its implementations across the group”.
He added: “The global expertise in digital technology of IBM complements our vision and has opened further avenues for us to tap the potential of distributed ledger in transforming our processes and workflows for better enterprise agility, transparency and regulatory reporting”.
IBM Japan has been very active in developing a number of blockchain solutions at various stages of the supply chain. In June, it announced a trial with Japanese retail giant Aeon, which would see a new blockchain-based payments network developed to service Japan and Southeast Asia.