CIMB Bank's Singapore Branch and iTrust have launched Singapore's First Blockchain Trade Financing Platform, and successfully completed their first structured trade financing transaction on the platform.
The transaction involves the financing of dairy products imported into China and is expected to generate transaction flows of up to $100 million a year, CIMB Bank said in a media statement on Thursday. iTrust provides secured real-time visibility of the cargo in transit and in the warehouse using blockchain-based IoT.
«Given the rapid technology shifts in the market today, we will continue to focus on digitalization and customer experience to transform the way we finance our corporate customers, thus adding value to our services. This blockchain trade financing with iTrust mitigates fraud risk, and alerts us of any unauthorized movement of the financed cargo,» said Mak Lye Mun, CEO of CIMB Bank Singapore.
Documents Are Blockchained
All data and documents from the transaction are «blockchained» in a distributed ledger for provenance and immutability, the bank said. The technology provides all stakeholders with a secured operational dimension of the transaction, which was absent in the past. With iTrust’s security, transparency and visibility for the documents and cargo, CIMB hopes to mitigate risks associated with commodity trade financing and facilitate credit extension for their customers.
«Digitalization is gradually transforming financing. With iTrust, we have used blockchain-based IoT to provide insight into the physical world into a blockchain digital platform. We believe that the day will come whereby all lenders and borrowers would demand to have a secured real-time view of their cargo under financing on a secure and immutable blockchain platform like iTrust,» said Lim Chee Kean, CEO and co-founder of iTrust.
Early Stages
As much as 80 percent of global flows of merchandise – worth about $9 trillion – is financed by some form of credit, guarantee or insurance, according to a global survey by the International Chamber of Commerce. Trade finance revenues were $39 billion in 2017. Yet, this $9 trillion business of financing global trade has only started to transact digitally.
While some processes are already being digitalized and banks and commodity traders are experimenting with blockchain technology, paper documentation remains widespread and the risk of fraud elevated. In fact, forgers have become so adept at faking documents used by banks that going digital has become a necessity for the industry, according to OCBC, Southeast Asia’s second-biggest lender.
