By Marco Polo, the trade finance blockchain built upon R3’s Corda platform recently saw the first two real-world transactions take place.
Announced on Thursday, the two trades were conducted by two German entities firstly by Voith a manufacturer of generators, turbines and transmissions and KSB SE a supplier of valves and pump systems.
One of the transactions saw the delivery of functional hydraulic couplings being shipped from Germany to China with the distribution of the pumps taking place in Germany’s borders.
This might sound mundane, but the transactions are essential as the required data was transacted utilising distributed ledger technology (DLT), thus eliminating the tedious and slow processes found within documents and intermediaries as per a press release from the consortium behind the blockchain platform.
The companies agreed upon the order as well as delivery details by means of the Marco Polo network and once the goods were delivered, the shipment data was entered into the system and “automatically matched with previously agreed data, triggering an irrevocable payment obligation on the part of the buyer’s bank,” according to the press release.
The transaction amount was not disclosed to the public and Marco Polo as declined to name which firm was the buyer and which one was the seller.
Banking Institutions On Board:
The payments and financial aspects were facilitated by two banks from Germany: Commerzbank and Landesbank Baden-Württemberg, both founding members of the Marco Polo consortium.
Nikolaus Giesber, a divisional board member for trade finance and cash management at Commerzbank, stated:
“The transaction proves that blockchain technology offers our clients a payment undertaking and state-of-the-art financing for trade transactions with both foreign countries and domestically.”
A member of LBBW’s board of managing directors, Dr Christian Ricken stated that DLT in trade finance “will make transactions faster, easier and more secure. Not only are we breaking new ground in terms of technology, but also in the cooperation between banks and businesses.”
What’s The Next Step?
Representatives at Marco Polo stated that the next step will be the execution of transactions via a direct connection to the user’s enterprise resource planning (ERP) systems; however, a timeframe for this was not confirmed.
The Marco Polo network which was founded in 2017 by R3 and TradeIX, another blockchain firm currently lists 13 bank members on its website.
In the future, the consortium has goals to entice more banks and transportation and insurance businesses, “so that the entire value chain for foreign trade transactions is represented digitally with data,” according to a representative from Marco Polo.
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