Standard Chartered has announced it is collaborating with Siemens Financial Services, the financing arm of Siemens, and digital trade provider TradeIX on a client pilot in the UAE to create an end-to-end blockchain-based smart guarantees proposition in trade finance.
With a view to transform the traditionally paper-intensive Bank Guarantees business, this is the first blockchain client pilot that fully digitizes the process, from initiation of the bank guarantee to the claim handling, says Motasim Iqbal, Head of Transaction Banking UAE at Standard Chartered.
Iqbal said the solution could “transform the way guarantees are issued and processed in the UAE.”
Unlike a letter of credit which involves multiple parties, performance details and over 100 pages of documents, a commercial bank guarantee is a much simpler instrument to digitize. The blockchain solution will enable Siemens to digitize its guarantee process for customers with large transaction volumes in the future, spanning issuance, amendments and claims, eliminating the multiple touch-points and inefficiencies which are inherent in the paper intensive process today, said Siemens CFO Michael Bueker.
“While digitalisation is revolutionising whole industries, incorporating digital trade finance solution into our daily operations is an important step,” said Bueker. “This will streamline our processes and make our trade finance operations smoother, faster and more efficient.”
The pilot started in March 2018 and will be fully completed later this year. The proposition is based on auto-executing smart contracts, leveraging the Corda Distributed Ledger and application layer provided by TradeIX.