GTR – Standard Chartered has implemented a new blockchain-based platform to finance commodity trading companies’ supply chains, with other international banks set to follow.
The bank has announced it has completed a supplier finance transaction on dltledgers, a Hyperledger Fabric-based platform that enables traders to connect to their supply chain network and digitalise trade processes and financing documentation.
The transaction was conducted in Singapore for Agrocorp International, facilitating the early payment for agricultural products purchased from Associated Grain Corp in Australia, and resold to a customer Bangladesh.
The bank says in a statement it completed the transaction within 24 hours, a significant reduction from the five to seven days a conventional transaction would typically take.
Meanwhile, the blockchain also records information on the origin of the commodities purchased as well as farming practices used, enabling buyers to better achieve sustainability objectives.
dltledgers’ target customers are commodity trading companies. Having already onboarded more than 50 traders, the Singapore-based blockchain startup aims to expand this number to 1,000 by the end of the year.
It is also looking to bring banks onboard to further support its users, with the platform facilitating letter of credit transactions, electronic bills of lading and supply chain financing.
dltledgers’ first bank-financed transaction for Agrocorp was announced in November and involved Singapore’s DBS Bank.
“There are now repeat transactions happening with Standard Chartered and DBS,” Samir Neji, founder and CEO of dltledgers, tells GTR,
He notes that as a soon a bank is onboarded, it can finance any of the traders on the platform. “We can give a bank one channel for doing multiple approvals across difference traders,” he says.
Other banks using the platform include National Australia Bank, OCBC Bank, Maybank and UOB. Neji adds that dltledgers is currently in discussion with Rabobank and other international banks about financing transactions on the platform.
For Standard Chartered, the Agrocorp transaction is the latest in a range of blockchain projects that the bank is involved in.
In late 2017, it worked with global insurer AIG and blockchain firm TradeIX to develop a blockchain-powered invoice finance programme for DHL. Now implemented by the logistics company, the solution helps its customers extend their payment period whilst maintaining the company’s receivables at current terms.
This was followed by the news in August 2018 that the bank was collaborating with Siemens Financial Services and TradeIX to pilot a blockchain-based solution for smart guarantees in trade finance.
Standard Chartered is also a member of the Marco Polo consortium, which is working with TradeIX and R3 on a Corda-based platform for open account trade.
When asked by GTR why the bank decided to replace TradeIX with a completely new blockchain partner for the Agrocorp transaction, a Standard Chartered spokesperson said: “We work closely with clients when it comes to supporting their digitisation journey. In this particular transaction, it is client-led. Agrocorp is already using dltledgers as its platform, and we support the trades it completes on its platform.”
Agrocorp now plans to implement dltledgers for all its suppliers in the next 12 months.