Us Bank finished its first entirely digital commercial financing transaction while financial institutions are moving away from paper processes for international trade.
The National Bank worked with the blockchain
“This was a collective effort to unite their forces and pilot this right for our client,” Daniel Son, head of working fund in Us Bank told American Banker. “If you want to do something digital, you must make sure that all parties within the underlying commercial transaction are allowed to deliver, send and accept these digital transactions.”
OFER Ein Bar, vice-president of financial solutions at Wavebl, said that partners like US Bank “bring us closer to the realization of our mission to provide practical solutions that rationalize commercial financing transactions and allow significant progress in industry. This is only the start”.
Blockchain technologies benefit from the benefit of common systems between the parties, but only work when each member of the part involved in the transaction is on the same channel, according to
The concept of blockchains use in
“Each large bank in each country has had proof of concept for the construction of these digitally commercial financing transactions for more than 10 to 15 years,” he said. “The problem is that each bank can happen on the same channel? If you look at certain large banks, they are not on a single nucleus platform. They do not have a big common book. In these concept proofs, the big banks have their own private channel that no one else uses. Can we really bring all these banks together in a single big book or a single common blockchain?
However, Renghari stressed that there are some potential circumvention solutions. “It could be a chain chain, where there could be a common agency, a world agency which links several channels and makes them interact from one to the other,” said Sanghari.
He added that the registers distributed could help the commercial industry unlock the broader advantages of the digitization of documents.
“Digitization brings many advantages to accelerate payments, tax collection and prices and accelerated transportation of documents, but the key is to bring each part of the transaction to the same channel,” said Rengachari.
Javelin’s research director James Wester, research director for digital assets and crypto at Javelin Strategy, also told American Banker that the integration of blockchain in commercial finance workflows had previously been attempted.
“The previous efforts were closed after failing to gain ground,” he said. “These attempts have shown how difficult it is to reach the alignment required throughout the commercial finance value chain.”
According to Wester, an obstacle to the complete digitization of documents is the differences in legal requirements and regulations in the supply chain.
“The industry remains heavy in paper because physical documents always carry the necessary legal weight through several jurisdictions,” he said. “A digital document supported by the blockchain only works if regulators, customs, financial institutions and all counterparts agree to recognize it. This alignment finally begins to occur, and the history of the American bank shows how the players of the value chain start to integrate digital documents into real workflows.”
International trade transactions generally
“When you no longer have to send physical documents in both directions, then you no longer have email expenses,” he said. “Digital costs a fraction of messaging costs, especially when there is an error that you must correct, then return the documents in both directions.”
Its also highlighted the indirect cost savings for banks when going to fully digital commercial documents.
“There is a risk attenuation component for digital against paper,” he said. “Covid is the best example of recent years, because post offices and letters have been closed. How do you really deliver documents for a period of pandemic? What about geopolitical problems? When you work with physical documents, you are subject to these disturbances.”
“Like the erroneous packages, it sometimes goes to the wrong address or the bad party,” said sound. “In some cases, it is good because it is simply relaxed, but in most cases, it could be extremely harmful from the point of view of confidentiality and the reputation of data, not to mention huge delays. All this is a fairly important incentive to move these documents through digital channels.”
“One of the advantages of a digital framework is that it gives each participant in the commercial ecosystem better visibility and control, especially during moments of disturbance caused by prices or sanctions,” said Wester. “But prices and sanctions have existed long before the digital files hold, so it remains to be seen if today’s trade environment will accelerate the adoption.”
The tendency to scan documents consists in accelerating speed in the trading and maritime transport industry. Digital Container Shipping Association, a commercial group which includes nine of the ten main lines of containers in the world, is committed to issuing
A declaration of co-signed engagement published by the DCSA indicates that “Lading electronic invoices could save customers
