The World Trade Organization and Trade Finance Global have joined together in publishing an update on global trade and the impact of blockchain or distributed ledger technology (DLT) on this sector of commerce.
Global trade, and trade finance, remains a bit of an analog process. Digital transformation can take place leveraging blockchain technology improving efficiencies, trust and speed. The ongoing COVID-19 health crisis accentuates the need for transformation and the authors state that “in every crisis lies opportunity.”
To quote to report:
“Of particular interest for trade digitalization are projects leveraging distributed ledger technology (DLT) – commonly referred to as Blockchain. The tamper-proof, decentralized and distributed nature of DLT makes it an attractive tool to break the silos that hinder international trade. Many projects that were still at an exploratory stage when the first “Blockchain and DLT in Trade” periodic table was launched a year ago have matured and reached the production stage. This is good news!
But technology is only a tool. The promising potential of DLT to facilitate international trade, from customs procedures to trade finance, will only be realized if regulation evolves to support the large-scale deployment of the technology and if a globally harmonized, digitized trade environment is put in place. This will require a global dialogue; a dialogue that involves all stakeholders, public and private. The ICC Digital Standards Initiative, which was recently launched with the support of Enterprise Singapore and the Asian Development Bank and the participation of the World Trade Organization, will work towards this ambitious aim – directly addressing disruptions experienced during the COVID-19 crisis as a result of the reliance of trade flows on paper documentation. We invite all interested stakeholders from the private sector, but also governments and other international organizations to join us in this endeavour.”
The report highlights many different industry participants attempting to provide blockchain-based services while driving value in the global trade sector.
Factorin, company mentioned in the report, is a decentralized technology platform that facilitates seamless and secure interaction between banks, suppliers and buyers. Andrei Maklin, co-founder and CEO of Factorin, explains:
“Blockchain enables you to create fundamentally new services and business models that cannot be implemented on traditional IT architecture. In 2020, this means traditional platforms are intermediaries that increase the cost of services and make money from their users’ data. The decentralized platform Factorin allows all participants to communicate directly with each other and decide what data is shared and with whom they share it. The demand for Factorin’s services, which are such a unique SCF product, is at an all-time high, which our continued fast growth ably demonstrates. Since January, the monthly turnover of financing processed through the platform has increased fivefold and in October amounted to over $165 million USD.”
It is an interesting report that provides a snapshot of the industry today. The report may be downloaded here.