German lender Commerzbank has executed two live transactions through the Marco Polo platform, a development it describes as a “major step towards market launch” for its blockchain-based trade offering.

Commerzbank revealed in late May it had successfully carried out a commercial cross-border trade transaction in co-operation with Turkey’s İşbank, using Marco Polo to facilitate the export of glass interlayers from German supplier Kuraray Europe to Turkish manufacturer Şişecam.

It has also executed a live transaction within the German market, supporting the sale of special couplings from manufacturing firm KSB to technology group Voith, with Stuttgart-headquartered LBBW the other bank involved.

The trades both took place during May 2021 and established irrevocable payment commitments to the suppliers involved, issued by the buyers’ banks. The data flows took place digitally without a parallel paper process, with access only permitted for parties involved, Commerzbank says.

They are the first live payment commitment transactions to have been carried out on Marco Polo that have been publicly announced by the banks involved.

The transactions “are proof that digital end-to-end settlement processes with a high degree of automation and an electronic data exchange are possible, and will become a reality in trade finance”, says Daniel Cotti, managing director of the centre of excellence for banking and trade at TradeIX – the fintech firm that operates Marco Polo.

Juliane Löbig, director of finance and accounting at Kuraray Europe, adds that the project “pave[s] the way for digitalisation of one of the last remaining paper-based processes: documentary payments”.

TradeIX had encountered delays in enabling banks to launch the platform commercially, saying in April 2020 it hoped Marco Polo would be fully live before the end of Q2 that year.

But Commerzbank, a founding member of the network underpinning the platform, hails the latest developments as a “key milestone in the run-up to the market launch of Marco Polo payment commitment” to the bank’s customers.

The first of the two transactions builds on an “advanced pre-live version” of the platform used to carry out a similar pilot trade last year, which also involved the sale of glass interlayers from Kuraray Europe to Şişecam.

At the time, participants cheered the transaction as the first time any Turkish bank had performed a trade finance transaction using blockchain technology.

For the second transaction, LBBW – also a founding member – says the initiative could mean the preparation, dispatch and checking of trade finance documentation “has been replaced by the fully automated matching of trade data”.

Once data has been collected and matched from each side of the trade, the platform ensures payment will be made on the due date, while assigning liability and maintaining confidentiality, the bank explains.

It is built on the Corda enterprise platform, a permissioned blockchain system developed by R3.

“This is absolutely the right time for this innovation to come along,” says Christian Ricken, a member of LBBW’s board of managing directors and head of its capital markets and asset management business.

“The coronavirus pandemic has shown how susceptible to disruptions paper-based settlement is.”