Lloyds Bank Adopts Blockchain Technology for Trade Finance
Lloyds Bank, a British retail and commercial bank established in 1765, has joined forces with Komgo, a firm that claims to be focused on catalyzing the global commodity trade finance network using the Ethereum smart contracts blockchain. The deal will enable Lloyds Bank to integrate distributed ledger technology (DLT) into its trade finance operations, reports FStech on September 25, 2019.
Lloyds Banks Taps Blockchain Technology
In a bid to facilitate faster international commodity trade finance transactions and letters of credit, Lloyd’s Bank has forged an alliance with Komgo, to tap the latter’s robust blockchain technology infrastructure.
Per sources close to the matter, Komgo’s platform is powered by Enterprise Ethereum blockchain, enabling the digitization of the entire commodity trade finance process, while also making it possible for businesses to exchange data and other documents including letters of credit in a fast, frictionless, decentralized and secure way.
Reportedly, in addition to using Komgo’s blockchain solution to fast track its trade finance and letters of credit transactions, Lloyd’s Bank will also be able to significantly curb fraudulent activities, since the bank and its partners will now be able to monitor transactions in real-time.
Reducing Paperworks and Third Parties
While international trade finance has numerous risks and bottlenecks associated with it, the issue of time in-efficiency, unending paperwork as well as unnecessary third party involvement are some of the most critical challenges plaguing market participants.
Commenting on Lloyds’ integration of DLT, Gwynne Master, managing director and global head of trade for Lloyds Bank Commercial Banking reiterated that blockchain technology will potentially reduce some of the pain points in trade financing. Master said:
“Cumbersome and ‘time-consuming’ are just two words used to describe international trade today. It takes over 100 days to trade a single commodity and the process involves many players, as well as massive paperwork and risk. Trade is particularly onerous for our commodities clients, where faster turnaround times and a streamlined channel are essential requirements.“
Master added that the new alliance with Komgo will see to the digitization and streamlining of the trade finance process and help corporate clients to shorten the time taken to complete international trades.
“We’re moving into a new era of simpler and more inclusive access to DLT, which has the potential to support strong, collaborative business relationships. Alliances like this and the underlying blockchain technology will help eliminate the challenges our clients face.”
In related news, earlier in September 2019, BTCManager informed that HSBC bank had successfully executed its first blockchain-powered letter of credit.