Among the copious potential use cases for blockchain, trade finance has gained the confidence of many industry analysts. Barclays was one of the earlier FinServ players to get on board with this concept, and this week, the U.K. bank has reportedly made that idea a reality.
Working with FinTech startup Wave, Barclays announced on Wednesday (Sept. 7) what they described as a “world first,” the successful completion of a trade finance transaction using blockhain technology.
The transaction was made via SWIFT infrastructure, reports said, and included the transmission of a letter of credit between Irish food conglomerate Ornua and Seychelles Trading Company.
In a statement, Barclays said using blockchain technology for trade financing could heighten efficiencies and lower costs by removing paper-based letters of credit between trading partners. The bank added that blockchain could also reduce the threat of fraud in these documents.
Barclays Global Head of Trade and Working Capital Baihas Baghdadi said the collaboration with Wave may “potentially transform trade finance for businesses around the world.”
Ornua Co-operative Group Trade Finance Manager David O’Rourke seemed to agree.
“Moving to paperless trade would be hugely beneficial in supporting the supply chain, through reduced costs, error-free documentation and fast transfer of original documents to our customers worldwide,” he said.
Reports said Barclays and Wave will take their next step in this initiative by collaborating with other trade finance clients.
Last year, Wave Founder Gadi Ruschin spoke with reporters at CoinDesk about its deal with Barclays and the potential for blockchain to disrupt trade finance.
“Blockchain is a very good solution to eliminate the pain in international trade,” the executive said, “because you have an industry that combines all industries, because all industries are either importers or exporters at some level. You have the carrier, the bank and the customer, and it’s hard to find one centralized entity everyone can work with.”
With Barclays, Wave is looking to act as that centralized entity to move data between parties via distributed ledger technology.