R3 to overhaul open account trade finance
Written by Chris Lemmon
R3 is working with trade finance technology firm TradeIX and 12 banks to launch an initiative focused on the overhaul of open account trade finance infrastructure.
The 12 financial institutions included in the initiative are Bangkok Bank, Barclays, BBVA, Bladex, BNP Paribas, Commerzbank, CTBC Bank, ING, Intesa Sanpaolo, Shinhan Bank, Royal Bank of Scotland and Wells Fargo.
The participants are developing an end-to-end open account trade finance business network which will be powered by TradeIX and R3’s Corda distributed ledger platform. The prototype will be customised to meet the needs of participants across multiple geographies, supporting the continued growth of open account trade whilst making it safer and simpler.
This initiative aims to provide cutting-edge open account trade solutions. These include a suite of trade specific APIs and technology tools, a sophisticated rules engine, and an open, standard core infrastructure for trade data, contracts, and transactions.
Financial institutions will be able to automate pre- and post-shipment financing and risk mitigation for corporate buyers and sellers around the world. In turn, corporate buyers and sellers gain access to light and flexible API-driven technology solutions that help simplify trade, improve visibility into trade flows, and provide access to much needed credit and risk mitigation services at critical points in the trade lifecycle. This infrastructure enables a higher degree of interoperability and is designed to integrate with existing platforms as well as R3 and other ecosystems.
The business network will also improve access to open account trade for the global ecosystem of banks, buyers, suppliers, technology providers, insurers, and other parties, such as logistics companies, that are critical to facilitating global open account trade flows.
David Rutter, CEO of R3, commented: “Earlier this year R3, TradeIX and a core group of R3 members teamed up to redesign the infrastructure behind open account trade finance utilising our Corda platform and the TIX-Platform of TradeIX. Existing trade finance infrastructure is in serious need of an upgrade, and this project is a big step towards the adoption of reliable, efficient and standardized processes for the entire sector.”
Rob Barnes, CEO of TradeIX, added: “The business network provides the entire trade ecosystem with a smarter, more secure, and more transparent infrastructure that connects currently siloed parties and systems, standardizes and digitizes trade documents, data, and assets enables the convergence of trade data from physical, informational, and financial supply chains. This provides trading parties secure, easy access to rich, verified trade data, APIs, and powerful technology applications that will drive a paradigm shift in open-account trade finance.”