As mentioned in a release, digital letter of credit capabilities will be offered in Australia, China, Hong Kong and Singapore starting this month.
The announcement also mentioned that to further promote the digitalization of trade finance in major trading hubs in the APAC region, DBS Bank has expanded its offerings on Contour’s trade finance network to corporate clients in four key markets in the APAC region.
DBS was notably the first Singapore-headquartered bank to join Contour’s beta network and it also managed to complete the first “fully digital” Letter of Credit (LC) transaction on the platform in 2020. DBS has now reportedly moved from Contour’s beta network to its production network to provide “streamlined digital LC transactions for customers across Australia, China, Hong Kong, and Singapore from this month.”
As stated in the release:
“Contour – also based in Singapore – and its ecosystem of bank partners such as DBS are working together to drive a collective effort to digitise global trade. Built on R3’s Corda, Contour’s network focuses on digitising paper-based trade finance processes, including the creation, exchange, approval and issuance of LCs, which are often cost-intensive and time-consuming.”
The announcement also mentioned that APAC is a key region leading the digital transformation of trade finance as banking institutions and corporates look to mitigate risk and improve cost efficiency in the wake of the socioeconomic challenges created by the COVID-19 outbreak. Traditional paper-based LC processes have been “a major obstacle to trade growth and created unnecessary complexity, cost and delays,” the release noted.
By joining Contour, DBS will be able to offer a “fully digital” end-to-end LC settlement process for its clients based in Australia, China, Hong Kong and Singapore, including the transfer of electronic trade and title documents.
The announcement also mentioned:
“This helps shorten settlement time, reduce paperwork and simplify complex trade processes. To date, those on the Contour network have seen great efficiency gains, reducing the process of an LC presentation by up to 90%. Contour’s decentralized network also reduces forgery and fraud opportunities as it validates all identities on its secure network and leverages its technology partners to match trade documents to real-time data, greatly reducing the chances of fraudulent activity.”
This digital solution is secure and sustainable, the release stated while adding that traditional trade uses “trillions of pieces of paperwork and millions of courier legs which has a significant impact on the environment.” Contour aims to provide a much “cleaner, more efficient and sustainable option that allows companies to reduce their carbon footprint.”
Carl Wegner, CEO at Contour, stated:
“The addition of another major Asian bank to our production network highlights Contour’s growing presence in APAC as an industry standard for digitising trade finance documentation. DBS has been an important partner for Contour in our work to support Singapore’s position as a key trading hub and has already participated in a number of successful transactions on our network. We’re delighted to facilitate its transition to offering live services to customers in these four markets. This is another important step on our journey to becoming the new digital end-to-end infrastructure for global trade.”
Sriram Muthukrishnan, Group Head of Trade Product Management, DBS Bank, remarked:
“Our partnership with Contour aligns with DBS’ ongoing efforts to drive greater efficiencies in trade and unlock strategic value for our corporate customers. We recognise that digitisation is a powerful enabler to simplify the highly complex nature of trade finance, especially for processes relating to letters of credit. Digitising trade processes is also an increasingly relevant and heightened priority for corporates to survive and thrive in the new normal and will form an integral component for resilient trade ecosystems of the future.”