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Commerzbank pairs up for “supply chains of the future”

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Germany’s Commerzbank and the Fraunhofer-Institute for Material Flow and Logistics (IML) in Dortmund, have teamed up to work together on “supply chains of the future” including digitisation and blockchain.

The co-operation, Financial Supply Chain Management 2025, will see the bank and the institute work together to develop scenarios for future supply chains. Fraunhofer IML will support Commerzbank with the orchestration of new processes and provide the latest insights into the future of physical supply chains as well as the deployment of blockchain-based technology in this area, says Commerzbank in a statement.

“Teaming-up with the Fraunhofer IML grants the best possible insight into the currently extremely heterogeneous digitisation approaches along the logistic and material flow processes of our customers,” says Commerzbank’s group executive of trade finance and cash management corporate clients, Bernd Laber.

Within the physical supply chain space, blockchain technologies are being used to build decentralised databases for internet of things (IoT) applications and smart contracts (automated processing of business contracts). These developments are expected to constitute the basis for new trade ecosystems that will see new supply chain finance concepts, faster transaction processing and new solutions in working capital management.

“Digitisation approaches in supply chain management as, for example, the development of smart containers which are autonomously able to route themselves, to communicate, to interact with logistic service providers and to initiate payments, will offer new business potential for banks in financing, risk management and transaction banking,” says director of Fraunhofer IML Michael Henke.

“I am convinced that technologies like blockchain and smart contracts will become the central enabler for the intelligent interlinking of physical and financial supply chains. With Commerzbank as innovative co-operation partner we will elaborate new, fast and secure solutions for the supply chains of the future.”

There is increasing focus on digitisation processes in international trade finance and the underlying commercial and financial transactions by corporates, banks and research institutions. Within supply chain finance, the introduction of new technologies is also seeing new players enter the market, and competition is heating up.

In a recent interview with GTR, co-founder of Hong-Kong based blockchain consultancy Intrepid Ventures, Collin Thompson, pointed out that blockchain is inherently P2P: “It cuts out the middle man, lowers transaction costs, provides visibility throughout the supply chain. You can track fleets, goods, store documents and make payments, all without a massive room of manila envelopes and 20 bankers.”

A recent survey by research firm East and Partners found that Chinese companies are set to ditch their domestic banks in favour of supply chain finance from non-bank lenders and foreign banks.

The survey, that polled 736 corporate treasurer and CFOs from eight different countries, showed that CFOs around the world are planning to reduce the number of supply chain finance banks they use from an average of 14. The trend is most acute in China, where one-third of corporates indicated intentions to move towards an international programme.

Last month, FCI (formerly Factors Chain International) announced it will roll out a new supply chain finance platform that will allow its network of 400 banks and factoring firms to fund their clients’ suppliers anywhere in the world.

 

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