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J.P. Morgan and Enigio have joined forces to digitalise trade finance. With a focus on a single critical use case – leveraging the bill of exchange to provide working capital – the first live transaction is expected soon. The journey so far has involved thorough internal reviews, rigorous testing and ambitious strategic thinking. GTR speaks with Charlotte Fryer, vice-president, product manager at J.P. Morgan and Patrik Zekkar, CEO at Enigio, about the complexities of onboarding a platform at a large bank, their progress to date and plans for full-scale implementation.

 

GTR: Can you describe the journey within the bank that helped make this partnership work, particularly in terms of the need for senior sponsorship?

Fryer: At J.P. Morgan, we’ve been on this journey since before it was fashionable. We started back in 2021, raising awareness inside and outside the bank of the opportunities the Electronic Trade Documents Act (ETDA) was likely to bring. We held our first workshop with Enigio in February 2022, and after seven hours, we came out with a north star and real commitment from both sides to move forward. The Enigio team’s professionalism and product really built confidence across all our stakeholders, which helped us to drive and sustain momentum whilst working together.

After the initial kick-off, we explored different products and use cases, carefully considering where to prioritise our efforts. We’ve consistently returned to the bill of exchange as the problem we wanted to solve, because of how popular and effective it is as a funding instrument for our customers. We didn’t want to launch a pilot, get a press release, and then wait years to achieve scale. It was imperative Enigio’s solution satisfied our stringent product controls, yet remained flexible to accommodate future development and product expansion. We’re ambitious as to where this project can go!

It was also essential to keep the business case at the forefront and secure the right senior sponsorship, including that of the global heads of product, sales, technology and operations to see the project through. They were key to steering the ship and without their unwavering support, we wouldn’t be where we are today.

Zekkar: Charlotte has hit the important points – commitment and transparency were crucial. From the banking side, it’s a complex environment with many responsibilities to juggle, and J.P. Morgan’s project management was fundamental in helping us meet requirements efficiently. As a tech provider, having a good product isn’t enough; delivering it while adhering to security and policy standards is equally important. The structured approach, numerous meetings and project streams ensured nothing was missed. It’s a new process for the bank, and there’s a lot to consider, but that thoroughness has been essential.

 

GTR: For the bank, what were the main risks identified around using blockchain for cross-border financing transactions, and how did you build confidence in the solution both internally and with customers?

Fryer: Enigio’s trace:original is a hybrid blockchain, combining private and public elements, and this required us to address certain risks unique to this model.

We approached the risk identification process by doing a detailed assessment, following the bank’s standards for onboarding new vendors. It was evident early on, given the use of blockchain, that this was going to require a different type of assessment to what the trade team had seen before. This also meant an increased level of due diligence specifically around the data sharing between private and public components of this hybrid blockchain.

We brought in a wide range of stakeholders from across the bank, leveraging our internal teams’ expertise in blockchain, cybersecurity and emerging technologies. Their knowledge allowed us to thoroughly review the platform, from top to bottom, even down to the source code, the use of the key store and proprietary algorithms. Enigio was incredibly patient throughout this entire process, spending countless hours explaining every piece of functionality to ensure our teams were confident in the solution.

Having completed all reviews and implemented Enigio’s trace:original in production, we’re looking to not only digitise existing paper-based bill of exchange structures but also incorporate digital negotiable instruments into future working capital solutions, and that is one of the reasons we’re ready to start discussing it publicly.

 

GTR: For Enigio, when working with banking partners, especially around the regulatory aspects, what steps do you take to ensure they’re comfortable using blockchain?

Zekkar: Good question. One aspect is transparency. As Charlotte mentioned, the bank went deep into the source code, which is exactly what we want – if there’s a security issue, it should be found. That’s in everyone’s interest. Also, each journey teaches us how to navigate these questions better, shortening lead times and providing the necessary data. I would say J.P. Morgan’s efforts have opened the door for the entire industry to move forward with more confidence.

Fryer: Going forward, with partnerships such as this, each bank will have its own set of questions. But I’d say we’ve come a long way in figuring out how to effectively communicate what Enigio offers to the industry. Hopefully, this messaging will help when other banks enquire, as it reflects how we’ve developed the solution. That said, I expect many banks will still want to conduct their own checks and consult with regulators, which is natural.

 

GTR: Moving from proofs of concept to full production can be challenging. What are you focusing on, both in your internal discussions and with clients, to ensure a smooth path to the first live transaction and what will it look like? 

Fryer: We are very close to completing our first transaction. All internal and external approvals are in place, internal requirements have been met, and we have implemented the solution into production.

Throughout this process, our magnificent operations team have been instrumental. As they will be processing these instruments daily, they have been heavily involved in testing the solution, providing us feedback to refine the system’s functionality. We will continue to partner with Enigio to ensure scalability and future-proofing. Some of the critical features will include entitlement controls, auditability and full visibility at every stage. This level of oversight is essential to our future use cases for Enigio’s platform.

But for now, we have a clear idea of what the initial set of transactions will look like: a cross-border deal where funding goes directly to the seller, and we’ll assume possession and ownership of the bill of exchange. It’s important to note that this is different from what others in the industry are testing for their initial use cases. Our rollout will start with our largest existing transactions and most interested clients, focusing initially on the UK, and this will be our first step before we introduce this in other J.P. Morgan locations.

Zekkar: It’s actually a solid approach to focus on one use case and go full force with it. Once you’ve crossed that initial hurdle and feel confident, expanding becomes much easier. The first step is always the toughest, so it’s important not to try and tackle everything at once.

 

GTR: How might industry efforts support this next stage of growth?

Fryer: The ICC’s Digital Standards Initiative (DSI) recently released a self-assessment tool to prove the reliability of digital platforms. This will address the challenge of ensuring reliable systems, which has been a major issue for years.

Enigio provided us with a copy of their self-assessment form to support our internal due diligence. Ultimately we felt confident, but I can see how others might raise a similar line of questioning: ‘We have the Act, but how do we prove that a particular feature or functionality meets its requirements?’ The DSI’s new framework will help with this.

For the industry to truly scale, we also need other financial institutions to embrace digital bills of exchange. Much of our focus moving forward will be on advocacy – engaging with partner banks and raising awareness about what we’re doing. Without wider bank adoption – not just in creating, but also in purchasing digital bills of exchange – we’ll see some corporate interest, but to achieve real impact, the banks must come on board.

Zekkar: Success comes down to structure, focus, transparency and trust. It’s been an enjoyable journey with J.P. Morgan, where high standards have pushed us to excel. Looking back, this collaboration has already helped drive significant growth.

But to scale, as Charlotte noted, we need broad participation. Everything is being digitalised; yet this remains the last bastion of trade finance that has not fully digitalised, and the banks can make this happen. The recent progress on reliable systems, led by ICC DSI, is a step forward. And the Model Law on Electronic Transferable Records is here to stay. Leaders like J.P. Morgan will show the way, and others will follow as they gain confidence, to everyone’s benefit. Banks can help keep their customers relevant by adding this value. In the end, this is about sustainability and inclusivity in trade, about making trade faster, cheaper and safer for all parties.