Two banks have just completed a multi-participant deal using blockchain technology, which they hail as an important expansion of the digital trade finance ecosystem.
The banks in question were Landesbank Baden-Württemberg (LBBW) and Commerzbank. The transaction was between Voith, a technology company, and KSB SE, the supplier of pumps, valves and related support services. The deal was completed through Marco Polo’s trade finance network, which is built on distributed ledger technology. Logistics provider Logwin AG was also incorporated into the digital process chain
In the transaction, order and delivery data were agreed upon between the companies via the international Marco Polo trade finance network. Payment terms were secured by an irrevocable payment commitment, triggered through automated matching of trade data.
What the people involved are now hailing as a significant milestone is that automatic matching of trade data was achieved with involvement of Logwin, which entered the relevant transport details directly into the network.
Gerald Böhm, head of guarantees and trade finance at Voith, said this was the first time the company had “processed the purchase and delivery of special hydraulic couplings from Germany to Taiwan using blockchain technology.”
Ralf van Velzen, head of export financing at KSB SE, added, “As a buyer, together with our bank we can ensure that the payment commitment becomes effective only if the goods are actually in the hands of the logistics provider, and on their way to the delivery destination.”
Commerzbank added that goal is now to keep developing the Marco Polo network and incorporate relevant parties like insurance companies, inspection authorities and local chambers of commerce.
FinTech Global reported in June that Commerzbank was among 25 banks helped by equensWorldline, a European card and payment processor, to become compliant with EU’s Revised Payment Service Directive (PSD2).
The last part of PSD2 is now getting implemented across Europe. This will see bigger calls for strong customer authentication (SCA). But because so many businesses have failed to prepare for SCA, the British Financial Conduct Authority has decided that the UK will now delay the final implementation of SCA by 18 months instead of enforcing it from the original September 14 deadline.
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