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Buzzing transformation in trade finance transactions via blockchain tech - A glimpse on how wave’s assistance extemporize Barclays banking

Let’s spool back just a few years ago, the term ‘bitcoin’ was the catchphrase in the fintech universe. But for now, blockchain has been eye catchy. Barclays is at the forefront of developing uses for the new technology, mentions Anthony Macey, Head of Blockchain R&D at Barclays.

The chief extends to demonstrate, the easiest way to describe a blockchain is as a distributive database that uses public/private key cryptography to secure data and make sure the data isn’t changed. If you have a number of actors in a system, not necessarily known or trusted, then a blockchain is a useful way of interacting with them because everyone has a shared view of the data state at all times. If you have a shared view of the data state, you can also have shared business logic, and work with numerous actors so Barclays, other banks and customers can share the information.

It’s database architecture, so in some ways asking how blockchain applies to banking is like asking “how does Oracle apply to banking”, he adds – hence, it’s a way of storing and using data and there are specific reasons why you would choose to use this kind of technology over existing solutions, mostly because of the resilience of the system.

In the best case scenario, the trade finance process for this type of deal takes seven or eight days  when you’ve gone through loading the goods, issuing your invoices, dealing with your home bank, getting those recommendations checked, sending the paperwork to Africa and getting it endorsed by the importing bankIn the worst case scenario, it can take 20 days. Since all this is physical, it’s really difficult to accelerate that process.

With this new process, it can be done in under four hours. That means a lot. As an exporter, you will know that you have a confirmed payable within the same day. And then, if you need an advance, we can give you the money right away. That is a massive facilitator – not only for the importers and exporters but also for the banks, which can make the funds available on the same day.”

US start-up Wave, one of many blockchain companies Barclays is developing ideas with, went through the bank’s 2015 New York Accelerator program, before Barclays swiftly brought their blockchain-based product from concept to reality – culminating in its use in the groundbreaking Ornua-Seychelles trade.

The letter of credit transaction between Ornua (formerly the Irish Dairy Board) and the Seychelles Trading Company is the first to have trade documentation handled on the new Wave platform, with funds sent via Swift.

It is hoped this landmark transaction could herald a new era of simpler, safer and faster trade finance, said a statement.

The new platform helps optimizing internal controls and processes for banks and reduces the risk of documentary fraud, but the key cost efficiency is in speeding up the time it takes to complete a trade transaction – from as many as 20 days, to just a few hours.

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