Commerzbank and a group of international banks today announced they have thrown their weight behind a project to create a blockchain-based trade platform started by UBS and IBM.
Bank of Montreal, Caixabank and Erste Group also joined the project, which aims to create the technology to track complex transactions in trade and along modern supply chains more efficiently.
The project, named Batavia (the colonial name for Indonesian capital Jakarta), will create a blockchain ledger which the banks hope will remove the need for multiple parties to each keep individual records of transactions, increasing efficiency and freeing up capital.
A single ledger held by multiple parties would create an immutable record of the movement of goods, which could also allow payments to be made automatically at various stages of the trade process rather than relying on manual additions.
The first pilots for the project, which aims to be open-access, will be carried out in early 2018, Commerzbank said. The platform will aim to integrate sensors, potentially allowing for shipments to track themselves, part of the movement towards the internet of things (IoT) in which firms targeting productivity improvements are investing heavily.
The technology aims to improve the “highly cumbersome" trade financing process, said Beat Bannwart, head of strategic innovation for corporates at UBS. The banks aims to make “a simple, digital and automated way of arranging, securing and financing [companies’] international trade transactions by leveraging new technology and creating an open ecosystem.”
UBS has also gained a lead against rivals on a separate blockchain-based digital currency, called unity settlement coin, which it hopes will help increase efficiency in financial services. That project has gained the support of Barclays, HSBC and Deutsche Bank, amongst others.
The blockchain technology on which the platforms will be built came to prominence through bitcoin, the digital currency. Blockchain technology uses distributed ledgers held by multiple parties to create a record of transactions which cannot be altered without taking control of all of the ledgers, creating a secure record which can be updated instantaneously.
The invention has been seized upon by technology firms, who see the potential to apply it in a massive variety of situations.
“In working with hundreds of clients to implement blockchain solutions, financing global trade has emerged as one of the use cases most in need of innovating,” said Fabio Keller, IBM project lead.
“Targeting the creation of large, global, multi-modal networks that bring transparency and trust to each step of the trade process is what makes Batavia a platform with so much potential to transform the way companies around the world do business with one another.”
Read more: Blockchain: Getting down to basics