Batavia, a blockchain trade finance platform, has successfully completed its first live corporate cross-border transaction. The platform is a joint venture between tech giant IBM and leading banks including Swiss bank UBS, European financial services firm Erste Group, the Spanish CaixaBank, German giant CommerzBank, and Bank of Montreal. This initial transaction saw the platform facilitate the exchange of cars from Germany to Spain and raw materials from Austria to Spain.
A WATERSHED MOMENT
The success of the pilot was an important milestone for Batavia and involved the facilitation of the full trade cycle. In a process that’s powered by smart contracts, the forming of agreements and closing of payments was automatic and was all recorded on a blockchain.
Smart contracts on the platform are triggered by specific events that participants agree on ahead of time, making the entire process autonomous. To make the process even more reliable, the platform includes tracking and risk management tools that ensure a smooth flow of products. These tools are tied to events in the supply chain, and in some cases, data gathered from IoT devices comes into play as well.
The pilot transactions were carried out in diverse transportation modes and geographical areas, as well as between different trading partners to test the platform’s ability to address arising needs and facilitate diverse transaction types.
A HOLISTIC SOLUTION
Batavia was developed to provide a holistic platform that would encompass all the processes that are involved in the tedious trade finance sector. It provides a digitized and secure platform which arranges, secures and finances international trade transactions automatically. The need for Batavia arose from UBS’s need to bring together all the stages of trade finance in one single solution where the entire business flow was covered.
An executive at Commerzbank, Niko Giesbert, said that this platform is a crucial basis for risk management.
Our joint successful live transaction demonstrates the potential of such a platform. Trade data and smart payment, which is automatically triggered by the transport data, form an important basis for risk management and financing instruments and add value to every supply chain.
IBM Blockchain Services manager Jason Kelley shares Giesbert’s view, adding that Batavia is proof that data sharing among participants in a permissioned network will accelerate cross-border trades. It will also introduce transparency, which is crucial in order for businesses in this sector to work together cohesively.
Giesbert also stated that following the successful pilot, Batavia would start developing a production-ready solution. This will involve partnering with other financial institutions and financial technology firms as well as other thought leaders in the market.
The trade finance industry is attracting blockchain innovations, with Indian bank ICICI announcing on April 17 that it had enlisted more than 250 corporates in its blockchain platform for domestic and international trade finance transactions. Having begun developing its platform in 2016, ICICI believes that it has the potential to revolutionize trade transactions, which are known to be quite document-intensive. The platform allows clients to implement trade finance transactions via secure smart contracts, track data in real time, and digitally authenticate ownership of assets.