Global technology and innovation company, IBM has joined hands with five banks – UBS, Bank of Montreal, CaixaBank, Commerzbank and Erste Group – to launch a blockchain-based trade finance platform called Batavia.
To be accessed by organisations of all sizes anywhere in the world, the platform aims to
support trade finance transactions by helping banks and their clients automate the trade finance process, something which still majorly remains manual and paper-based. The platform will be powered by the Hyperledger Fabric blockchain framework.
For the uninitiated, in trade finance, banks provide funding and other services to importers and exporters to facilitate commerce.
According to IBM, Batavia will be supporting trade finance for transactions across all modes of trade, whether it be by land, sea or air. The software firm has decided to take the responsibility of acting as a consultant alongside transportation industry experts as well as the banks’ customers so as to ensure that the platform always remains flexible and intuitive.
Blockchain is basically an anonymous online ledger that makes use of a data structure to make the process of transaction an easier and simpler process. It provides users the ability to manipulate the ledger in a safe way without seeking the support of a third party.
Trade finance can be considered as a good use for blockchain as it involves numerous parties such as buyers, sellers, transporters, the institutions financing the transactions and inspectors.
Currently, each party in trade finance has to maintain its own records, which often results in mistakes and delays. Batavia will be providing all the participating parties with a shared record, this ensuring reducing errors and encouraging more business. It will also make use of so-called smart contracts, or computer programs on the blockchain that will ensure to automatically enforce the terms of an agreement.
In the past, we have covered various stories on how the blockchain is invading financial institutions like banks and electronic voting systems in several countries, including India. Recently, we also carried an article about how Blockchain is blurring the lines between technology and nature through a new species called Plantoid, a new digital plant, which is designed to reproduce itself via transactions made on the blockchain.
First announced in 2016, a pilot of the platform is expected to take place for the new participating banks in the first quarter of next year.
This development was first reported in Reuters.