Wave Of Big Banks To Develop, Launch Blockchain-Based SME Trading Platform

Josh O'Neill

17 January 2017

A group of seven banks, including , has signed an agreement fostering the development of Digital Trade Chain, a product that uses blockchain technology to ease commerce between European small- and medium-size businesses.

Blockchain technology, a virtual distributed ledger of transactions shared peer-to-peer, can record ownership across a public network of computers rendered tamper-proof by advanced cryptography. It is already known as the platform for the controversial digital currency bitcoin. The nascent technology is causing a stir within the financial services sector as its supporters believe it could reduce hidden expenses in the financial system by ousting inefficiencies across areas such as payments, syndicated loans and equity clearing.

Digital Trade Chain is based on a prototype trade finance and supply chain solution originally developed by KBC, an Irish bank, which in addition to Natixis, Rabobank, UniCredit and the three mentioned above signed a memorandum of understanding in Brussels. The blockchain technology-based offering seeks to “seamlessly” connect the parties involved in a trade transaction - typically the buyer's bank, seller, seller's bank and transporter – online and through mobile devices, Deutsche Bank said in a statement.

By maintaining secure records on a digital distributed ledger, Digital Trade Chain will accelerate the order-to-settlement process and decrease administrative paperwork significantly, Frankfurt-headquartered Deutsche Bank said. The platform's heightened level of transparency will give SMEs confidence to initiate trade with new partners in their home market or in other European markets, the firm added.

Pooling expertise and resources, the consortium's members will initially focus on launching a scalable version of Digital Trade Chain in seven European markets: Belgium, Luxembourg, France, Germany, Italy, the Netherlands and the UK.