Commerzbank and Fraunhofer-Institute for Material Flow and Logistics (IML) have joined forces on a research project focusing on the digitization of trade finance using blockchain and distributed ledger technology (DLT).

The bank and the institute have agreed to work together to develop scenarios for future supply chains. According to the official release, Fraunhofer IML supports the bank with the orchestration of new processes and provides latest insights into the future of physical supply chains as well as the future deployment of blockchain based technology in this area.

“Our core competence in the trade finance business; cash management financing trade and risk management will continue to be of great relevance for our customers in the digital age. Teaming-up with the Fraunhofer Institute for Material Flow and Logistics grants the best possible insight into the currently extremely heterogeneous digitisation approaches along the logistic- and material flow processes of our customers“, commented Dr. Bernd Laber, group executive Trade Finance & Cash Management Corporate Clients, Commerzbank.

Corporates, banks, and research institutions are increasingly focusing on the digitization of international trade finance and the underlying commercial and financial transactions. Blockchain and DLTs build a decentralised database for the so called Internet-of-Things applications (IoT) and Smart Contracts (automated processing of business cases). These emerging technologies have the potential to form the basis for new trade ecosystems, new supply chain finance concepts, faster transaction processing and new solutions in working capital management.

Laber said that the bank is already working on a number projects and various consortiums with also international banks on the digitisation of bank products and bank services, as well as blockchain applications. He added that being a corporate bank, the focus on future supply chains is of “paramount importance”.

“Digitisation approaches in supply chain management as for example the development of smart containers which are autonomously able to route themselves, to communicate, to interact with logistic service providers and to initiate payments will offer new business potential for banks in financing, risk management and transaction banking”, said Prof. Dr. Michael Henke, Director of the Fraunhofer IML. “I am convinced that technologies like blockchain and smart contracts will become the central enabler for the intelligent interlinking of physical and financial supply chains. With Commerzbank as innovative cooperation partner we will elaborate new, fast and secure solutions for the supply chains of the future.”

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