Eleven leading banks have collaboratively developed a trade finance application on R3’s distributed ledger platform ‘Corda’ that incorporates shippers and carriers.

Commercial letters of credit still account for 38% of the trade finance product mix, according to the International Chamber of Commerce (ICC). In an effort to meet customer demand and address growing margin pressures, banks have been jointly developing a solution to drive greater efficiencies, reduce cost, and simplify existing processes.

According to the official release, Bangkok Bank, BBVA, BNP Paribas, HSBC, ING, Intesa Sanpaolo, Mizuho, RBS, Scotiabank, SEB, and U.S. Bank have been collaborating with R3 and technology partner CGI on a number of trade finance projects over last year. Building on the lessons from the previous projects, the banks have now developed a prototype application on Corda that could significantly reduce inefficiencies and costs by streamlining the processing of sight letters of credit.

Built specifically for the financial services industry, Corda offers the ability to simplify the complex links and networks involved in the trade and trade finance market by providing a shared and synchronised database of transactions between businesses across geographies.

“Like so many of the processes and systems banks are forced to use today, the infrastructure that supports trade financing is extremely outdated and prone to risk and error. The work we have been doing with our members over the last year has shown that this challenge no longer needs to stand in the way of giving businesses access to the services they need to trade across borders. The application we have built is the first of its kind and we look forward to rolling it out to our Corda users across the world,” David Rutter, CEO of R3, said.

A number of R3 member institutions now plan to pilot the platform with the goal of making it widely available in 2018.

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