- With this project SEB tries to minimize the time needed to close LC transactions.
The platform allegedly replaces the current paper-based process with a digital solution.
According to reports, the platform provides an interface that enables the seamless exchange of information.
A leading Swedish bank, SEB, has created its own part of an international block-chain trade finance platform. The bank announced this news in an official press release on December 1 and pointed out that it has set up its own production environment as part of Contour, a global block chain-based platform for trade finance transactions, which went live in early October this year.
Using block chain technology, Pro SEB’s production environment will facilitate the banks’ processes. The bank is currently running a test environment that will enter the beta phase before the upcoming launch of the live production environment.
According to the press release, the project is a platform designed to minimize the time needed to process transactions related to letters of credit. For each SEB, the platform has the potential to reduce lead times by up to 90%, reducing the time required to complete a transaction from an average of 10 days to less than 24 hours. According to the bank, the new platform would replace the current paper-based process with a digital solution.
Marina Sandquist of Trade Finance and a member of the team working on the implementation of the platform at SEB said,
“With this technology, all parties have a common interface and can access all information simultaneously. This replaces SWIFT and the need to send each other physical mail.
Development of a global platform
Through SEB, she was involved in the development of the Contour platform from the very beginning. The first step in the development of the platform was taken five years ago when the bank joined an international banking consortium as a partner, which includes leading banks such as Bangkok Bank, BNP Paribas, CTBC, HSBC, ING, Standard Chartered and Citi. This coalition led to the creation of R3, a US-based company that later created a block chain infrastructure platform called Corda.
SEB has been a co-owner of R3 since 2017. According to the press release, a project to develop a trade finance solution on the Corda platform was started. As reported, Contour has deployed this solution worldwide. Kristina Söderberg, Venture Capital, and Helen Seeman, Global Product Manager for Trade Finance, Transaction Services, will represent SEB on the company’s board of directors.
A sector with great potential
To date, more than 80 banks and companies in 17 countries have already tested the technology to simplify transactions involving raw materials, petrochemical products, energy and metals, among others. SEB therefore believes that the potential of the technology is enormous.
“It is expected that the market for trade finance will reach 79 billion dollars by 2026. According to the original estimates, about 40% of this trade will have been handled by then using Contour’s block chain technology”.