According to a press release, Banco Bradesco is the latest institution to join R3’s blockchain network for trade finance, Marco Polo.
One of Brazil’s largest financial services companies, Bradesco’s total assets are worth $338.2 billion, with a market capitalization is of $49.1 billion.
What is Marco Polo?
R3’s Corda enterprise blockchain technology powers the Marco Polo network, and is integrated with TradeIX, a distributed trade finance platform.
R3 is currently working with over 200 members and partners across several industries to develop on Corda, their open-source blockchain platform. Corda has been applied in a range of industries, from financial services to insurance, to healthcare.
As explained on their website, “it records, manages and executes institutions’ financial agreements in perfect synchrony with their peers, creating a world of frictionless commerce.”
TradeIX Platform facilitates the flow of goods, money and credit in the trade finance market. In September 2017, transactions for DHL financed by Standard Chartered and credit insured by AIG were successfully made on the platform.
What differentiates the Marco Polo is the ERP integration, which is offered to banks and their clients. Reportedly, members of the network can experiment with the platform before developing differentiated offering of their own.
What Marco Polo offers
Daniel Cotti, managing director at the Center of Excellence, Banking & Trade for the Marco Polo Network, noted that a lack of connectivity plagues trade processes of today. With that in mind, the impetus behind the blockchain-powered trade finance network is to improve time and costs and to provide transparency.
Traditional commercial banks can benefit from this solution to directly target the fragmentation between institutions and customers.
Roberto Medeiros, Bradesco’s Head of International and Trade Finance, said:
“We’re now focused on leveraging the best technology to develop new trade finance solutions for our corporate banking customers.”
The network counts with major global banks such as ING, BNP Paribas, Commerzbank, Standard Chartered Bank, Natwest and Sumitomo Mitsui Banking Corporation. It is said that Marco Polo is the “largest network of commercial banks leveraging blockchain for trade finance.”
Indeed, the network is growing. Last week, the Austrian bank, Raiffeisen Bank International (RBI) joined Marco Polo. As for successful transaction, in March of this year, the platform’s first successful live trade operation was conducted between two German firms and the bank Commerzbank.
Bradesco isn’t new to blockchain
According to Cotti, Banco Bradesco is Marco Polo’s first pilot in the Latin American region.
However, it isn’t Bradesco’s first encounter with blockchain initiatives. Bradesco is part of JP Morgan’s Interbank Information Network (IIN), which has more than 220 banks. Primarily used to exchange data, IIN focuses on addressing compliance issues by enabling the sharing of information in a permissioned way. Bradesco is also part of IBM’s World Wire cross border payment network. The bank, alongside five others, has signed a letter of intent to use IBM’s network to issue a stablecoin. Last year, Bradesco signed a memorandum of understanding with Japan’s largest bank, MUFG, for cross-border payments using the Ripple technology.
Blockchain is unleashing the sector’s potential
Trade finance is one of the industries being disrupted by blockchain. The technology has allowed for the removal of out-dated paper-based processes, which are time-consuming and costly.
Marco Polo is one example of such a digital revolution, but various trade finance schemes are under development around the world. Nationally or across borders, we have seen financial institutions delve into the possibilities that blockchain holds.
China announced just last week that the government is spearheading a pilot of a cross-border trade finance blockchain platform. Meanwhile, France’s Société Générale issued a covered bond worth 100 million euros last month using Ethereum blockchain.
Blockchain enterprise adoption has steadily increased as the hype around the buzzword dies down, and industries increasingly explore the technology. More developments in trade finance are expected this year as traditional institutions adopt the digital revolution.