The National Bank of Canada, the country's sixth-largest bank, is collaborating with business consulting and IT company CGI to launch a blockchain-powered trade finance solution. Rather than focusing on the actual finance of a trade agreement, however, the bank and CGI are working to facilitate the negotiations process for standby letters of credit and guarantees, according to a press release issued Monday (Oct. 22).
The process is often complex and lengthy, said the bank and GGI, but necessary for banks to secure financial transactions and contracts. Typically, negotiations occur via email and are, therefore, prone to errors, with a lack of transparency and risk of delays.
The platform, CGI Trade360, enables corporate clients of the bank to conduct negotiations via smart contracts to enhance the security of those discussions. The technology can "intelligently construct agreements" for streamlined contract development, the companies noted.
"This pilot project is a great opportunity to leverage blockchain technology to simplify the process for negotiating standby letters of credit and guarantees, while making it more transparent and secure," said National Bank of Canada's Vice President of Payments, Cash Management and International Solutions Patrice Roy. "This will enable us to offer a simple, fast and efficient experience to our commercial clients, which facilitates managing their business."
CGI Trade360 was developed on the blockchain platform, designed by Skuchain via its Contract Builder, the firms noted. In a statement, Skuchain CEO Srinivasan Sriram said the solution is the "first live implementation" of the Distributed Ledger Payment Commitment standard developed by the Bankers Association for Finance and Trade (BAFT).
CGI Vice President of Trade and Supply Chain Finance Frank Tezzi said the platform provides a "single source of truth" during the negotiation process, through issuance and re-issuance.
"This example provides certainty and transparency for beneficiaries regarding the guarantee process as they enter into a financial transaction," Tezzi added.