Seven European banks have agreed to develop a shared platform that will make domestic and cross-border commerce easier for European small and medium-size (SME) businesses by using Blockchain.
Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit signed a Memorandum of Understanding in Brussels under which they intend to collaborate on the development and commercialisation of a new product called Digital Trade Chain (DTC).
The product is based on a prototype trade finance and supply chain solution originated by KBC and tested to ‘Proof of Concept’ stage.
The aim of the project is to simplify trade finance processes for SMEs by addressing the challenge of managing, tracking and securing domestic and international trade transactions by connecting all of the parties involved (i.e. buyer, buyer’s bank, seller, seller’s bank and transporter), online and via mobile devices.
Larger companies use documentary credit as a way of reducing the risks involved in doing business, but documentary credit is not always suitable for SMEs or for companies that prefer open account processes.
The banks contend that by maintaining secure records on a digital distributed ledger DTC will accelerate the order-to-settlement process and decrease administrative paperwork significantly. They plan to initially focus on building critical mass in seven European markets: Belgium and Luxembourg (KBC), France (Natixis, Société Générale), Germany (Deutsche Bank, UniCredit), Italy (UniCredit), the Netherlands (Rabobank) and the UK (HSBC).