Multinational investment banking giant Standard Chartered is joining hands with Siemens Financial Services and TradeIX, a digital trade provider, to create an end-to-end blockchain-based smart guarantees proposition in trade finance. The initiative plans to transform the traditionally paper-intensive bank guarantees business. It claims to be the first blockchain client pilot that fully digitizes the process, from initiation of the bank guarantee to the claim handling.
The pilot started in March 2018 and will be fully completed later this year. The proposition is based on auto-executing smart contracts, leveraging the Corda Distributed Ledger and application layer provided by TradeIX. Motasim Iqbal, Head, Transaction Banking UAE, Standard Chartered, said:
“This is an industry-defining solution which we believe will transform the way guarantees are issued and processed in the UAE. Siemens Financial Services has been a key partner for us to build and develop this pilot on the distributed ledger and we believe that this technology can further be harnessed by the Dubai Smart City initiative.”
Unlike a letter of credit, a commercial bank guarantee is a simpler instrument to digitize. This solution will enable Siemens to digitize its guarantee process for customers with large transaction volumes in the future, spanning issuance, amendments, and claims, eliminating the multiple touch-points and inefficiencies which are inherent in the paper-intensive process today. Michael Bueker, Chief Financial Officer, Siemens added:
“While digitalization is revolutionizing whole industries, incorporating digital trade finance solution into our daily operations is an important step. Especially at Siemens, as a digitalization pioneer, this move is part of our strategic mission of going digital in all arenas. This will streamline our processes and make our trade finance operations smoother, faster and more efficient. We are delighted to partner with Standard Chartered in leading such a game-changing transformation which will help our customers go digital in their guarantee and claim processes and achieve higher efficiency.”