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StanChart makes its first Singapore trade finance deal using blockchain

Original Article from Business Times published on 24th Jan 2019.

Business Times reported that:

“STANDARD Chartered’s Singapore unit has pulled off its first cross-border trade finance transaction on a blockchain-based platform, after previous initiatives by other arms of the global lender. StanChart tapped startup Distributed Ledger Technologies’ platform to complete an agri-business supply chain deal in one day, instead of the normal five to seven, the bank announced on Thursday.”

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Original article on published on 28th Dec 2018. 

Here is a short excerpt and we are quote:

“But some developments have nothing to do with the bank consortia.

For example, DBS – which is, in most respects, a tech leader – does not appear in these big assemblies. The DBS approach has not been characterized by joining consortia of other banks, but by producing integrated solutions for individual clients, by harnessing DBS’s technological capabilities to address their particular needs.

The potential is very big for Asia to drive technological innovation   – Olivier Guillaumond, ING CRaof Latiff, group head of digital and GTS product management at DBS, says the best way for the bank to be relevant in the supply chain and add value is “to build APIs [application programming interfaces] which know how to study the nodes in the blockchain, and extract the information you need in order to be able to do what you need to do. You pull data related to invoices, dates, transactions, counterparties, and digitize the supply chain process.”

Latiff continues: “There are lots of instances where the bank is in the consortium but the end-customer only gets limited incremental value. That’s not what we wanted to do.” He argues that the better way to be differentiated is to use internal tech infrastructure to develop solutions for specific client needs, “to help our clients’ businesses achieve their objectives not just for today, but for a long time to come.”

For example, DBS announced on December 1 that it had enabled an end-to-end cross-border blockchain trade platform for a commodity supply chain network, made up of farmers, exporters, traders and end customers, but not any other banks.

DBS put this together with Agrocorp International, the global agri-commodity trading company, and with Distributed Ledger Technologies, a blockchain provider.

Among other things, it offers participants in the supply chain real-time updates on commodity prices and delivery information, as well as trade financing approval for orders coming in.

DBS says it cuts Agrocorp’s average working capital cycle by about 20 days.

At the start, the solution focuses on Australia, where about 4,500 farmers in the Agrocorp network will be connected to end-customers such as supermarkets and restaurants. Using it, customers can get access to real-time pricing and supply information, and can carry out live transactions, tracking delivery of orders. On the payment side, once a trigger event is reached – such as confirmation that goods have been shipped – the blockchain platform triggers instructions to DBS to request financing for Agrocorp, or to release payment to the farmer. There is little manual intervention, making it faster.

What problems does this solve for Agrocorp?

“There’s a few challenges,” says Vishal Vijay, head of business development at Agrocorp.

“Firstly, we’re relying on an antiquated system that was developed a few hundred years ago by the Dutch trading houses: a system of bills of lading and letters of credit, all paper documents.”

Digitizing that process brings not only convenience but “security to all the given participants in a supply chain, from the farmers to the processors to the shippers to the end-customers, that the goods are being transacted and the payments are being made.”

Second, Vijay says, is traceability. “More and more in this environment, our customers want to know exactly where their product is coming from,” he says. “They want to be able to trace it all the way back to the farm. That’s something we are solving with this.” So it enables sustainable practices, and the monitoring of that sustainability. And the third is time – which begets business. “Paper documents take time to be generated, as well as to be sent across from one part of the world to another, and time is money,” Vijay says. Generating documents in real time and enacting payments faster mean a reduction in the working capital cycle of five to 10 days. That translates into more business, as well as interest savings.

The plan is for Agrocorp to broaden its blockchain platform from Australia to other key origination markets including Canada, Myanmar, Ivory Coast and Ukraine. The range of commodities traded on it will grow too, from pulses such as mung beans and chickpeas, to cereals, cotton, edible nuts and oilseeds.”

Go read the full article via the link here.


DBS, Agrocorp set up blockchain platform enabling real-time updates on commodity trade

Original article from the Straits Times published on 1st Nov 2018 by Seow Bei Yi.

SINGAPORE – A new blockchain platform is set to help farmers receive payments for their goods more quickly, enabling parties in the supply chain to look into the sources of their commodities and making it easier for them to learn more details of their trade as well.

For a start, the electronic platform connects about 4,500 farmers in Australia to global end-customers such as supermarkets and restaurants.

This means parties in the supply chain can check pricing and supply information in real-time, carry out transactions, as well as track the delivery of orders on the go. The transactions can be in any currency.

The platform is a collaboration between Singapore’s DBS Bank, commodity trading company Agrocorp International and blockchain provider Distributed Ledger Technologies.

It is expected to expand its reach beyond Australia over the next year or so to other origin markets such as Canada, Myanmar and Ukraine.

Speaking to The Straits Times ahead of the platform’s launch on Thursday (Nov 1), Agrocorp’s head of business development Vishal Vijay said the practice has been for parties in the supply chain to wait for physical documents to be generated and passed from one party to another before a transfer of ownership of goods occurs.

It typically takes five to 10 days, he added, for such documents to be ready and presented to a counter-party to verify that the goods have indeed changed hands.

“There are two age-old processes that we are trying to revolutionise with this platform,” he said.

“One, you will be able to see a faster, more efficient generation and transfer of documents and, as a result, we will also be able to make and receive payments more efficiently.”

The time savings allow goods to be shipped out more quickly as well, reducing detention charges at storage centres, as well as the amount of interest parties pay to the banks which fund their trade flows, he noted.

“The second thing is that we are able to provide a better degree of transparency to our end-customers with regard to where a product is coming from,” he said.

With the platform, farmers can access commodity prices and register a sale. These sales and purchase agreements are stored digitally on the same system.

Upon certain “trigger events”, such as confirmation that goods have been shipped, the system prompts DBS Bank to take action, which includes releasing payment to a farmer.

Parties along the supply chain can upload and view related documents on the platform, and their trading partners will need to validate changes to contractual terms before any trade can be made.

DBS said in a statement on Thursday that transparency is heightened with details of each trade and the sources of commodities now stored on the platform, and buyers can easily trace such information to achieve sustainability objectives.

Mr Raof Latiff, DBS’ group head of product management for global transaction services, said banks presently do not get “full visibility” of, among other things, “what happens in the farm, what is produced in a farm, and what is given to a trading company in Australia, and how that particular commodity is sold to a commodity house in Singapore”.

But the knowledge is important, he said, especially with Singapore hosting major trading hubs and procuring agricultural products not just for local consumption but also for international use.

Bringing the players together “gives the bank complete transparency of where the physical supply chain is” and allows the bank “to understand what obligations are due from these transactions, such as what payments need to be made”, he added.

Enterprise Singapore figures show trade in commodities, including agricultural products, contributed over $28 billion in local business spending and hired about 15,300 professionals over the past five years.

The plan is to get more users on board the platform.

“The only way this will be successful is for wider adoption… You can’t have each bank and each company in our industry using their own platform,” said Mr Vijay, who noted that it took over US$100,000 (S$138,000) in terms of time and resources for the company to set up the platform.

“We are committed to not keeping this as something that is strictly owned and operated by Agrocorp, but rather something that is open-source, shared, and get more of our suppliers and customers to come on board,” he added.

“Banks like DBS can also start using it for its own transactions as well with more of its clients, not just Agrocorp.”

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