The first two commercial transactions have been undertaken by Marco Polo, the trade finance blockchain built on R3’s Corda platform. The transactions between two German companies are the first of their kind to be mapped using blockchain. Trade finance makes it possible and easier for importers and exporters to conduct business through trade. The success of this project could see global commerce becoming more affordable because it will become cost efficient and faster.
Voith, a global technology company and KSB SE, a pump and valve manufacturer, were the companies involved. One transaction involved the delivery of special hydraulic couplings from Germany to China and the other the delivery of pumps within Germany.
The press release states that all order and delivery details were agreed between the companies via the Marco Polo network and the payment term was secured by a conditional payment commitment from the buyer’s bank. All payments were handled by two German banks, Commerzbank and Landesbank Baden-Württemberg who were both founding members of Marco Polo.
Marco Polo have not disclosed the amount of money involved.
“After delivery, the corresponding delivery details were entered into the network and automatically matched with previously agreed data, triggering an irrevocable payment obligation on the part of the buyer’s bank,” says the press release. “The overall flow of information was efficiently and transparently mapped by R3’s Corda blockchain platform”.
Innovative Technology Solutions In Finance
Commerzbank recognised the potential of distributed ledger technology (DLT) for trade finance early and actively shaped it in various initiatives. Commerzbank is testing relevant prototypes in many business areas together with its clients and is working on new solutions for capital markets as well as trade finance.
Gerald Böhm, head of Guarantees and Trade Finance at Voith, said: “Voith is always interested in innovative technology solutions in the field of finance”. But despite their joy at the project’s success, he still thinks there is a great deal of work ahead and calls for “standardised global governance” to be established for the digital execution of commercial transactions.
Ralf van Velzen, head of Export Financing at KSB SE said: “With Marco Polo we see an opportunity to take a significant step towards increased security, more efficiency and greater settlement speed in the area of payment processing. It is exciting to see state-of-the-art technologies such as distributed ledger being applied in an area as outmoded as trade finance”.