The Voltron initiative, built on R3’s Corda blockchain platform, has completed global trials which saw over 50 banks and corporates participate in the simulation of multiple digital Letter of Credit transactions across 27 countries on six continents.
Voltron uses blockchain technology to reduce the time it takes to execute the entire process of paper-based Letter of Credit from 5-10 days to under 24 hours. 96% of participants in the trial said Voltron will accelerate their Letters of Credit process, improve efficiencies and reduce cost.
Traditional trade finance processes are largely paper-based, time-consuming and prone to risk. According to a survey of trial participants, 86% of firms believe such inefficiencies are increasingly becoming ‘intolerable’ for both corporates and banks. As a result, 61% said they are likely to move trade flows to ‘open account’, a far more risky option for exporters.
Leading institutions including ABN AMRO, Alfa Bank, Banco de Crédito del Perú-BCP, Banorte, Bci, China Everbright Bank Hong Kong Branch, CIB, CommerzBank Commercial Bank of Qatar, Ekman & Co AB, LH TRADING, MUFG, Natixis, National Bank of Egypt, RBI, SABB, Scylla, Standard Bank, Societe Generale and The Saudi British Bank – SABB participated in the six week trial of the trade finance solution. The trial was delivered by a partnership of Bain, CryptoBLK and R3 on Microsoft’s Azure cloud platform. This trial builds on a number of successful live transactions on Voltron in 2018 and earlier this year. The transactions demonstrated the improved speed and reliability of Letters of Credit.
The Voltron application designed and built to be compatible with both Corda and Corda Enterprise, will replace the complex links and networks involved in the trade finance market by providing a shared and synchronised database of transactions between businesses across the world. This digital alternative is significantly faster, more reliable and cost-effective than current paper-based systems, reducing fraud risk and removing time-consuming reconciliation processes by providing a single, immutable record of a trade.
Denis Dodon, Head of CIB Innovations, Alfa Bank, said: “The greatest point which is necessary to be stated is having a holistic overview for the entire process of the DC lifecycle. Everything is done in the same interface, which is connected to all the workflow participants, information is shared instantly, what will significantly expedite the transaction, optimizing working with documents, which could be rectified in an instant way should there be any discrepancies identified. Corda based DLT environment creates values to every participant, it really works in a business logic named by R3 as ‘I see what you see’”
Chris Sunderman, blockchain initiative lead trade finance at ING and Voltron founding member bank said: “The trial has been a great collaboration between banks and corporates, R3 and CryptoBLK and it ensures a better understanding of the possibilities and benefits of Voltron: the end-to-end digitization of letters of credit. This will help in broadening the support base of Voltron and it will grow a larger and geographically well spread network of banks to adopt it, enabling an increased number of transactions in the production phase.”
Samuel Mathew, Global Head, Documentary Trade Product Management at Standard Chartered Bank and Voltron founding member bank comments: “The strong interest and sign-up for the Voltron trial from both banks and corporates across various geographies is testament to Voltron’s potential towards establishing an inclusive industry blockchain utility for a digital letter of credit. We continue to work closely with our partners and clients to enhance efficiency and user experience in this digital paradigm.”
Valerie von Lucke and Hans Huber of Commerzbank’s DLT Lab said: “The Voltron trial underscores Corda’s position and prevalence for trade finance. Voltron shows the right steps towards a digitized, simplified, and paperless Letters of Credit business. Any measures towards accelerating processing time and decreasing administration efforts of trade business are in the interest of all parties involved in a trade transaction. As part of our research into DLT, we will attentively continue to watch the development of Voltron and its potential benefits for our customers.”
David E. Rutter, CEO of R3, comments: “This latest trial is testament to Voltron’s growth in recognition as one of the world’s top trade finance applications by banks and corporates. All parties involved demonstrate an increasing commitment to be involved in the development of the technology. The success of these trials build momentum amongst all participants, and have seen us take another step closer to shaping what the future of trade finance looks like. We encourage banks and corporates across the globe to join us in the trial of the Voltron CorDapp and contact R3 or any of the Voltron member banks and partners directly.”