IBM Trials Blockchain Powered Trade Finance Platform with International Banks
IBM announced that its blockchain technology-based trade finance platform, Batavia, has successfully passed its first set of live transactions on the network on April 19, 2018. The purpose of the platform is to be able to “track and trace key events in the supply chain” as well as use IoT devices to log details about the “location and condition of goods in transit.”
IBM Earns Financial Attention
Batavia is a project being developed by IBM alongside a number of international financial institutions, including Bank of Montreal (BMO), CaixaBank, Commerzbank and Erste Group.
When Batavia was first introduced in 2017, Marie Wieck, a general manager at IBM Blockchain said that trade finance was a perfect fit for the technology in an interview with Reuters.
“Trade finance is a perfect use case because there are so many participants in a trade ecosystem especially when you talk of global trade.”
The supply chain trial involved two trade transactions, one that tracked the transport of cars from Germany to Spain and the other, textiles for furniture production from Austria to Spain.
The press release confirmed that in its current state, Batavia could not only successfully close trade agreements but also execute smart payments, “which can be automatically triggered by specified events in the supply chain and recorded in the blockchain.” The usage of the phrase smart payments may be in reference to the term “smart contracts,” a relatively recent development made popular by the digital currency Ethereum.
Niko Giesbert of Commerzbank, a German financial services company, said that the “joint successful live transaction demonstrates the potential of such a platform. Trade data and smart payment, which is automatically triggered by the transport data, form an important basis for risk management and financing instruments and add value to every supply chain.”
While blockchain technology has seen a remarkable uptick regarding adoption worldwide, that statistic is even more pronounced in the supply chain industry where trials involving distributed ledgers are skyrocketing.
IBM Not Alone in Innovation
The Batavia project is not the only recent instance of the technology attempting to revolutionize the trade finance sector. India’s second largest financial institution, ICICI Bank, also signed up over 250 corporate clients for its custom developed blockchain application for domestic and international fund transfer.
Both initiatives are aiming to move away from the trade finance sector’s reliance on paper-based records. In addition to being entirely digital, blockchain technology also allows records to be stored with better security and permanency thanks to its fundamental principles of decentralization and immutability.
According to Giesbert, Batavia’s next step is to “enter a new phase focused on the building out of a production-ready solution.” He continued, “This may include joining forces with fintechs, financial institutions or other innovation leaders in the market.”
Batavia’s successful trial run marks yet another milestone for IBM’s effort in pioneering blockchain technology across the tech industry. In early 2017, the company also unveiled its Blockchain as a Service program. Like Microsoft, it also provides a public cloud service with which enterprises can build blockchain networks.
