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SMBC is planning to use R3 and TradeIX’s Marco Polo platform to handle a trade transaction towards the end of the year.
Japan’s third-largest bank by assets, Sumitomo Mitsui Banking Corporation (SMBC), has announced that it will begin using R3 and TradeIX’s Marco Polo blockchain platform for its trade finance activity before the year runs out. The decision to go ahead with this was made after the company successfully completed a proof-of-concept (PoC) test which handled cross-border transactions between the bank and other firms including Mitsui & Co, Indorama Ventures Group, as well as Bangkok Bank, the third-largest banking institution in Thailand.
According to a recently published news release, the entities involved in the PoC traditionally used paper-based methods to handle their trade transactions. Now, using the Marco Polo blockchain, everything is digitized and completely automated, ensuring transparency, real-time access and that all information about updates is at the fingertips of all parties involved.
“Through the PoC, each party was now able to update data pertaining to purchase orders, invoices, and shipping such as the logistics company name, port of loading/destination, shipping dates etc. based on the most up-to-date information, and at the same time share this data with other parties in real-time,” the announcement reads.
Furthermore, the Bangkok Bank successfully used Marco Polo to send Mitsui & Co. a guarantee of payment from the Indorama Ventures Group, further allowing Mitusi & Co. to use this issuance to access financing from the SMBC. The entire process was carried out via blockchain, ensuring speed, efficiency, transparency, and errorless data reconciliation.
The Marco Polo platform for a while now has been breaking new strides and on-boarding a number of members to its platform. The bank boasts of over 20 major banking institutions from different parts of the world including the Bank of America, Commerzbank, Bangkok Bank, SMBC, Alfa Bank, Standard Bank, Danske Bank, BNP Paribas, LBBW, Anglo-Gulf Trade Bank, Natixis and Standard Chartered Bank among others.
Just over a week ago, the platform announced that it would be conducting the first trade transaction between Russia and Germany. The transaction will involve Russian institutions including Novolipetsk Steel Company (NLMK), and Alfa Bank, as well as Germany’s Commerzbank and Vesuvius GmbH, a metal engineering company.
The Marco Polo platform now also gives the opportunity for a third party in a trade transaction to wait until goods or products are on their way to a buyer before payment is triggered. First used in March, this particular type of transaction was done involving an engineering and tech firm Voith, and a manufacturer – KSB SE. Powered by LBBW and Commerzbank, two members of Marco Polo, the transaction allowed a third-party logistics company called Logwin AG, to access the blockchain and begin payment while the goods were en route.
The PoC for the SMBC was done earlier in January this year and since it was successful, the release notes that SMBC has been getting ready to use the Marco Polo platform commercially.