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Blockchain in Trade Finance

Blockchain in Trade Finance

Apr 06, 2020

This page shall establish an outline on the key considerations of the application of blockchain technology in Trade Finance. Members of the Hyperledger Trade Finance SIG are invited to attach respective resource file where appropriate as the content of this page shall be incrementally adjusted.

  1. What is trade finance?

    1. Usually between importers and exporters

    2. A means for importers to buy goods

    3. A means for exporters to be paid

    4. A way to reduce risk to both of not receiving services or making payment

    5. Will usually involve a bank to provide credit or provide trusted party services

    6. Different mechanisms can be used, letters of credit or bank guarantees

    7. Could also involve factoring, ie someone else collects payments.

  2. How does the current value chain / user journeys of Trade Finance look like? Who are the participants? What parties are required to form the minimum viable ecosystem, i.e. the min. amount of parties to sustainably establish the network benefits?

    1. Users of trade finance: 

      1. Importers/buyers 

      2. Manufacturers 

      3. Traders 

      4. Exporters/sellers 

    2. Providers of Financial Services: 

      1. Banks 

      2. Insurers 

      3. Exporters 

      4. Importers (eg the case with Amazon and Walmart) 

      5. Finance Syndicates



  3. What are products and services being involved in trade finance? E.g. letter of credit, different financing methods, insurance, etc.

    1. LC = Letters of Credit

    2. BG = Bank guarantee

    3. BL = Bill of Lading

    4. CWO = Cash with order

    5. COD = Cash on delivery

  4. What are the problems or inefficiencies with the current system?

  5. What is the value proposition of blockchain technology for Trade Finance?

  6. What are currently existing DLT / blockchain-based solutions in Trade Finance?

  7. Interoperability and standardisation matters

  8. What are governance models for trade finance (enterprise) blockchains (e.g. consortia) with a particular focus on securing attractiveness of platform for both co-initiators as well as later-entrants?

  9. What are the learnings from the day-to-day operation of blockchain networks for trade finance applications (commercial, technical, legal (data, IP, FS regulatory) considerations)?

 

Attached the presentation deck on Introduction to Trade Finance by Vikram Kimyani at Oracle