CIMB Singapore and trade financing platform iTrust have completed their first trade transaction using blockchain and internet of things (IoT) technology.
The transaction involved the financing of dairy products from an unnamed company into China. Using the iTrust platform, the cargo was tracked in real-time via IoT sensors which enabled visibility of the goods in transit and upon arrival to the destination. Data and documents were also all logged using distributed ledger technology.
iTrust is a trade financing platform that uses blockchain, and blockchain-based IoT technologies to improve supply chain visibility and risk management. iTrust is a joint venture between Ascent Solutions, an IoT solutions company, and 1Citadel, a blockchain technologies firm.
The platform aims to address many of the fraud risks facing trade finance, such as phantom cargoes, fabricated documents and theft, by making the end-to-end trading process more transparent.
Mak Lye Mun, CEO of CIMB Singapore says that trade financing with iTrust presents an opportunity for CIMB Singapore to support its customers more “efficiently and cost-effectively”. He adds: “We are looking forward to working closely with iTrust on this innovative way of trade financing in other markets as well.”
iTrust’s platform works by buyers and sellers exchanging documents such as invoices on the blockchain platform after a trade deal is agreed. True copies of the shipping documents such as bills of lading are also uploaded onto the platform. The physical document copies can be verified against copies on iTrust’s blockchain system. While being transported, lenders and traders can log onto the platform for immediate visibility of the cargo location; iTrust will also provide real-time alerts if the cargo is tampered with, or if it has deviated from the agreed route. Once the conditions for payment have been fulfilled, smart contracts will trigger payments from the buyer in accordance with the payment terms.
The bank has said it hopes to mitigate risks associated with commodity trade financing in the future by receiving alerts of unauthorised cargo movements.
This is just the latest in a string of blockchain–based transactions to ease trade finance in China.
In September, HSBC completed a cross-border, renminbi (Rmb)-denominated letter of credit blockchain deal. The transaction saw Hong Kong-based MTC Electronic Co Limited (MTC) export a shipment of raw materials to its Shenzhen-based parent company, Shenzhen MTC. Using the Voltron blockchain platform, HSBC China issued a digitised letter of credit on behalf of Shenzhen MTC to HSBC Hong Kong. MTC then reviewed, verified and uploaded their own trade documents to the platform to complete the transaction.
The same month, DBS Bank revealed its first multi-tier financing facility on blockchain platform to help Chinese SMEs get faster access to trade finance. Developed with an unnamed Chinese logistics company, Rong-E Lian offers multi-tier financing solutions to more than 1,000 suppliers in the logistics firm’s supply chain. The blockchain system allows the credentials of a supplier to be verified within seconds, and once these are verified the bank is then able to offer digital trade financing services to upstream suppliers within 24 hours.
Furthermore, in August, Standard Chartered completed its first joint deep-tier supply chain financing transaction with Linklogis for Digital Guangdong and its suppliers using blockchain. Using Linklogis’ ‘WeQChain’, Standard Chartered and Linklogis enabled Digital Guangdong to have transparency of its whole supply chain, as well as cheaper access to credit for its suppliers.