Dubai: Standard Chartered announced on Wednesday that in collaboration with Siemens Financial Services, the financing arm of Siemens, and TradeIX, a digital trade provider it will carry out a client pilot to create an end-to-end blockchain-based smart guarantees solution in trade finance.
The move is expected to drastically transform the traditionally paper intensive Bank Guarantees business. This is the first blockchain client pilot that fully digitises the process, from initiation of the bank guarantee to the claim handling.
“This is an industry-defining solution which we believe will transform the way guarantees are issued and processed in the UAE. Siemens Financial Services has been a key partner for us to build and develop this pilot on the distributed ledger and we believe that this technology can further be harnessed by the Dubai Smart City initiative,” said Motasim Iqbal, Head, Transaction Banking UAE, Standard Chartered.
Unlike a letter of credit which involves multiple parties, performance details and massive amount of paper documents, a commercial bank guarantee is a simpler instrument to digitise. This solution will enable Siemens to digitise its guarantee process for customers with large transaction volumes in the future, spanning issuance, amendments and claims, eliminating the multiple touchpoints and inefficiencies which are inherent in the paper intensive process today.
“This move is part of our strategic mission of going digital in all arenas. This will streamline our processes and make our trade finance operations smoother, faster and more efficient. We are delighted to partner with Standard Chartered in leading such game-changing transformation which will help our customers go digital in their guarantee and claim processes and achieve higher efficiency,” said Michael Bueker, Chief Financial Officer, Siemens LLC.
The pilot started in March 2018 and will be fully completed later this year. The proposition is based on auto-executing smart contracts, leveraging the Corda Distributed Ledger and application layer provided by TradeIX.
“We believe that global trade is at the cusp of multi-level digital transformation which will revolutionise the entire business and operating model. As the platform provider, we are excited to be involved with Standard Chartered and Siemens Financial Services to help script this journey,” said Rob Barnes, CEO of TradeIX.
Going forward technology will be at the core of Standard Chartered’s strategy in delivering the next generation trade products to facilitate trade flows to their clients across Asia, Africa and the Middle East.
“The future of trade is going to be all about data. To this end, we are excited to be the first in the industry to co-create this solution with Siemens Financial Services and explore innovative ways on how we can digitise trade and leverage real-time data to deliver efficiency gains and transform the way trade finance is conducted,” said Samuel Mathew, Global Head, Trade Products, Standard Chartered.