September 6, 2016
Landmark transaction set to transform international trade
06 September 2016––Ornua (formerly the Irish Dairy Board) has become the first organisation in the world to complete a trade transaction via an innovative new Blockchain platform following a landmark collaboration with Barclays Bank Ireland.
The letter of credit transaction between Ornua and Seychelles Trading Company is the first to have trade documentation handled on a new platform developed by fintech company Wave. The platform has the potential to transform how international trade is carried out in the future through a new era of simpler, safer and faster transactions.Currently trade transactions of this nature often involve a high number of participants in different jurisdictions around the world, which in turn requires a significant amount of paperwork, counter-signing and courier journeys.
The new Blockchain based platform developed by Wave ensures that all parties can see, transfer title and transmit shipping documents and other original trade documentation through a secure decentralised network, eliminating many of the current inefficiencies in international trade. The new system is intended to speed up trade transactions, reduce costs for companies around the world and reduce the risk of documentary fraud.
Commenting on the announcement, Baihas Baghdadi, Global Head of Trade & Working Capital at Barclays, said:
“One of the biggest headaches in global trade currently is the vast movement of paper required to facilitate transactions, with multiple organisations in the chain. That is why we’ve been very keen to pioneer Blockchain technology that will save time and money for our clients, and potentially transform trade finance for businesses around the world.”
David O’Rourke, Group Trade Finance Manager at Ornua said:
“Moving to paperless trade would be hugely beneficial in supporting the supply chain, through reduced costs, error free documentation, and fast transfer of original documents to our customers worldwide.”
Ornua was selected for the pilot transaction due to its expansive export coverage which is supported by a strong focus on innovation. Ornua’s international trade expands across over 110 countries worldwide, making it one of the most globalised organisations in Ireland.
Companies around the world stand to save significant costs and time, with the shipping industry and financial institutions expected to be some of the biggest beneficiaries. Barclays has identified substantial direct cost savings that can be made on courier costs alone using the new platform, and it could also bring down the time taken to complete an end to end trade finance transaction from days to a few hours.
Wave was one of eleven companies to have gone through the Barclays Accelerator programme last year, during which time it received expert mentoring from the bank. Since then it has been working with Barclays’ Trade & Blockchain team to explore the various use cases of its innovative technology. Barclays is also seeking to involve other banks in supporting the adoption of Wave’s system, with the hope that this can develop into an industry wide improvement in how trade documentation is managed.
Following the successful pilot Barclays and Wave will be working with a select group of trade finance clients to develop the service further.