Commerzbank and R3 have taken what they call a “milestone” step towards widespread adoption of blockchain technology by businesses around the globe. The announcement comes after the two have conducted a proof of concept which saw the integration of the SAP S/4HANA business process system and R3’s Corda blockchain platform.
According to Nikolaus Giesbert, divisional board member at Commerzbank, the proof of concept has shown that “a connection between potential Corda applications (CorDapps) and the SAP ERP system is technically possible”.
“This means that our customers can directly provide and access relevant data from their own ERP system to and from the blockchain network/application without having to input data manually by a separate user interface,” he says.
The integration is a “crucial requirement for implementing new trade finance and supply chain finance solutions in the blockchain environment”, adds Michael Spitz, CEO of Commerzbank’s main incubator.
Corda already integrates with other database systems, such as H2, PostgreSQL and Oracle, but according to Ricardo Correia, head of partner management at R3, the SAP integration is “a significant first step towards us trying to integrate to business process systems, versus low-level infrastructure integration”.
“SAP has arguably the largest footprint of ERP around the world. Most banks and large corporates will use SAP ERP, so getting integration at the business process level with someone like SAP is significant,” he tells GTR.
Correia explains that the ability to interact with systems such as SAP S/4HANA will eventually allow R3 to start streamlining trade finance and create integrated end-to-end trade and supply chain solutions.
“Integration to ERP systems will enable us to create brand new business models. For example, by accessing purchase orders and invoices, we can now create new marketplaces where organisations can fund and more easily buy and sell these types of assets,” he says.
Correia adds that R3 has a number of CorDapps projects underway that will benefit from the integration, but cannot provide further details.
While the proof of concept and the deployment of Corda on the SAP Cloud has been described by the parties as a “milestone in enabling widespread adoption of Corda by businesses around the globe”, there is still some way to go until there is full adoption of blockchain.
“We’re not altogether there yet I’m afraid,” Correia says. “What this proof of concept has done is to encourage the continuation of this work, in order to get to a point where we have true business process integration. There is more work to be done.”
R3 is currently exploring a number of blockchain use cases in the trade finance space. One of them is Voltron, which was the first trade finance prototype to be showcased by R3 in mid-2017, and which aims to streamline the processing of sight letters of credit. The project culminated in HSBC and ING conducting their first live, commercial trade finance transaction on blockchain, for agri trading giant Cargill, earlier this week.
The other initiative, Marco Polo, is developed together with TradeIX and 12 banks, and focuses on open account trade. The aim is to enable real-time connectivity between trade participants, improve visibility into trade flows and simplify access to credit and risk mitigation services throughout the trade lifecycle. The parties are currently piloting the platform with the goal of making it widely available this year.