Trade finance is a paper-laden, error-filled and laboriously slow method of facilitating transactions between buyers and sellers, but one that is critical to the flow – and growth – of global trade. What if it were possible to remove the paper and manual processes, automate payments embedded in a trade contract, improve efficiency, reduce fraud, cut costs, track and trace shipments, mitigate risk and allow every participant in the end-to-end chain to view the same unalterable information?
This is the potential that blockchain, or distributed ledger technology (DLT), offers in the trade finance space – full digitalisation of trade – and the reason that several bank consortia have been enthusiastically piloting DLT-based solutions in the past few years.
