Banks are now officially conducting live, commercial transactions on the we.trade blockchain platform for open account trade finance.
UniCredit in Italy and KBC Bank in Belgium have announced they have used the platform to facilitate a tinplate trade between metal packaging producer Gruppo ASA and its supplier, Steelforce. They are the first to make such an announcement since the platform signed its first round of licence agreements in December, but other banks have already conducted live transactions on the platform, a we.trade spokesperson confirms.
we.trade is a solution for managing, tracking and protecting open account trade transactions between SMEs in Europe. Powered by Hyperledger Fabric and built by IBM, the platform gives full visibility on transaction and shipment status and digitalises the whole process from order creation to payment execution. SMEs, who will be able to use we.trade via their banks, can also use the platform to access financial services.
The aim is to onboard several thousand SMEs by the end of the year, we.trade tells GTR.
Among the products available are the bank payment undertaking (BPU), where the buyer’s bank provides the seller with an irrevocable undertaking to pay the invoice at maturity date, and BPU financing, where the seller’s bank provides financing by discounting the BPU.
UniCredit says in a statement that the transaction was “successfully completed”, allowing Gruppo ASA and Steelforce to finalise the transaction in “just a few days”.
The transaction, however, didn’t involve any financing, and delivery of the goods and payment are still to take place.
“Through the creation of a smart contract on the we.trade platform, payment will be automatically triggered according to the terms agreed by the counterparties once the buyer has confirmed the delivery of the goods, making the transaction considerably faster and more transparent,” UniCredit says.
we.trade is a bank consortium-led initiative that has been underway since January 2017 (when it was known as Digital Trade Chain) and was incorporated as an independent legal entity in April 2018. Having since merged with Batavia, a similar blockchain platform, the entity today has 12 shareholders: CaixaBank, Erste Group, Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale, UBS and UniCredit.
In July, the company announced it had facilitated the first pilot transactions, involving HSBC, KBC, Nordea and Rabobank. The company has since been working to finalise the licence agreements that would allow banks to use the platform commercially.
Speaking to GTR last month, we.trade’s COO Roberto Mancone said the platform has now signed licence agreements with the 12 shareholding banks and has started to market the platform to non-shareholder banks.
“We completed the agreements at the end of last year and now the banks are developing their own distribution models,” he said. “Some banks will start with a soft launch, initially with a set amount of clients, based on their distribution capacity. And of course the banks – like with any other product – need to train their sale force, launch campaigns and so on.”
He continued: “I expect that in this quarter there will be a systematic slow adoption by the banks – to make sure that the clients give proper feedback and, based on that feedback, we will continuously add and adjust features so that, little by little, we can gain the satisfaction of the clients.”
Mancone went on to say that even banks outside of Europe are now expressing interest in we.trade. Technically, he explained, the platform can work anywhere in the world, but geographical expansion will take place one step at a time to ensure that local regulatory requirements are met, particularly around the handling and protection of personal data.
One region we.trade is keen to enter is Asia. Since late October, the firm has been working with eTradeConnect in Hong Kong, a similar blockchain platform that went live last year with 12 banks and 18 corporates, to explore how the two solutions could work together. It is expected to announce the results soon.
According to Guido Cicognani, Gruppo ASA’s CFO, the firm will now extend the use of the platform to other interested suppliers and customers in Europe.