Eleven banks have developed a prototype trade finance application on R3’s distributed ledger platform that aims to reduce inefficiencies and costs by streamlining the processing of sight letters of credit.

Bangkok Bank, BBVA, BNP Paribas, HSBC, ING, Intesa Sanpaolo, Mizuho, RBS, Scotiabank, SEB and U.S. Bank have been collaborating with R3 and technology partner CGI over the last year on numerous trade finance projects, building and testing applications. Using lessons learnt from these projects, the group has now developed a trade finance application on Corda that incorporates shippers and carriers.

Several R3 member institutions now intend to pilot the platform with the goal of making it widely available in 2018.

David Rutter, CEO of R3, commented: “Like so many of the processes and systems banks are forced to use today, the infrastructure that supports trade financing is extremely outdated and prone to risk and error. The work we have been doing with our members over the last year has shown that this challenge no longer needs to stand in the way of giving businesses access to the services they need to trade across borders. The application we have built is the first of its kind and we look forward to rolling it out to our Corda users across the world.”

Vivek Ramachandran, head of growth and innovation, commercial banking at HSBC, added: “The prototype integrates a standardised user interface that allows carriers and shipping companies to prepare and validate shipping details when they onboard goods and deliver them to the buyer – even if they are on a different technology platform.

“We believe that offering optionality in terms of the systems and technologies participants use, and ensuring interoperability between these technologies, will significantly advance efforts to digitise trade. To further enhance the prototype, we’ll continue to work with established and emerging title registry providers to ensure this solution can provide a secure and legal title transfer of goods in a live environment, and anticipate piloting the app on the R3 network before the end of the year.”

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