How Blockchain Trade Finance Is Breaking Proof-of-Concept Gridlock

It's no surprise that the application of distributed ledger technology in trade finance and supply chain management has for some time been a focus of financial institutions around the world.

Several of the trade finance DLT platforms currently under development were initiated by banks.

"The driving factor wasn't the need to find a blockchain use case, it was the clients' needs - they want a leaner, faster process in place, how to secure international trade transactions, how to finance them in order to grow their business."

Hubert Benoot, chairman of We.Trade, agreed, adding: "Clients are unhappy that, in a European context, their growing of trade is limited by the absence of good instruments to finance and cover risk."

The principal pain points revolve around the bilateral nature of trade relationships - each component in the chain usually interacts one-on-one with another, leading to duplication of processes and a lack of transparency as to the state of a shipment.

Anne-Claire Gorge, global head of product management trade services at Société Générale, told CoinDesk that's the reason why the group managed to move fast and deliver a minimum viable product.

Still, We.Trade's Benoot hinted that the interest from the regulators has so far been supportive, given the impact that increased trade within Europe could have in the region - SMEs account for around two thirds of total EU employment.

Neither platform is trying to replicate existing trade finance formats.

Gorge of Société Générale further detailed: "It's not necessarily a question of trade processes or bank fee savings, but also a new way of securing transactions where they currently don't have solutions."

While perhaps not all of the ongoing proofs-of-concept will see the commercial light of day, it increasingly appears that trade finance will escape the spread of dropped trials and shelved pilots prevalent in other financial applications over the last few years.