Commerzbank is the latest financial institution to join the blockchain-fueled trade financial initiative launched by UBS and IBM, according to Reuters news reports on Wednesday (Oct. 4).
Bank of Montreal, Erste Group Bank and CaixaBank have also jointed the effort, which has culminated in the launch of the Batavia platform to help banks and their corporate clients streamline trade finance processes. The platform enables all parties in a trade transaction to track that transaction the moment goods are shipped until they reach their destination.
Batavia uses smart contracts to ensure terms of an agreement between trading partners are fulfilled, reports added.
“Trade finance is a perfect use case [for blockchain] because there are so many participants in a trade ecosystem, especially when you talk of global trade,” said IBM Blockchain General Manager Marie Wieck in an interview with the publication. “Digitizing and creating a level of trust is a perfect accelerator.”
According to reports, UBS and IBM are slated to launch a pilot of Batavia in the first quarter of next year. But, according to reports, because blockchain remains a new technology, it will take time for any benefits of the tool to be realized by corporate users.
IBM is championing adoption of blockchain in more ways than one. Earlier this year, the company was selected by HSBC and Deutsche Bank, among others, as a partner in their “Digital Trade Chain Consortium.” Like UBS’ Batavia platform, the consortium that includes HSBC, Deutsche Bank, Société Générale, Natixis, Rabobank and UniCredit are also developing a solution that deploys blockchain for the purpose of trade finance.
The technology company is also championing smart contracts in various ways. Last June, reports said that IBM is working with American International Group to develop an insurance policy solution for Standard Chartered Bank by using smart contracts, which enable the bank to exchange information in real time for insurance policies.