Banking giant Standard Chartered and Siemens Financial Services have joined forces to trial blockchain for bank guarantees. The companies use the technology provided by TradeIX.
UK-based multinational bank Standard Chartered has teamed up with Siemens Financial Services, the financing branch of German engineering group Siemens, and blockchain startup TradeIX, according to a Wednesday press release. The banking giant plans to conduct a blockchain trial in the United Arab Emirates (UAE) by developing smart guarantees in trade finance.
Standard Chartered and Siemens started to work on the project in March by using the tools provided by TradeIX, a UK startup that has developed a blockchain-based trade finance platform and provides APIs to integrate its solution into existing systems and applications. The experiment, which relies on R3’s blockchain platform Corda, will be ready by the end of this year.
The companies claim that this is the first blockchain trial to fully digitize the bank guarantee processes, from the initiation of the bank guarantee to the management of the claim. Standard Chartered hopes to automate processes and make the bank guarantee business less dependent on paper documents.
Motasim Iqbal, who leads Standard Chartered’s Transaction Banking UAE division, commented:
“This is an industry-defining solution which we believe will transform the way guarantees are issued and processed in the UAE. Siemens Financial Services has been a key partner for us to build and develop this pilot on the distributed ledger and we believe that this technology can further be harnessed by the Dubai Smart City initiative.”
According to the project, Siemens plans to digitize its guarantee process for clients with large transaction volumes, from issuance to amendments and claims, thus reducing the inefficiencies that are specific to the operations involving paper documents. The solution uses a blockchain ledger and smart contracts to offer a seamless communication channel between the guarantee issuer (Siemens), the bank (Standard Chartered), and the beneficiary (Siemens’ clients).
Michael Bueker, CFO at Siemens LLC, noted:
“While digitalization is revolutionizing whole industries, incorporating digital trade finance solution into our daily operations is an important step. Especially at Siemens, as a digitalization pioneer, this move is part of our strategic mission of going digital in all areas. This will streamline our processes and make our trade finance operations smoother, faster and more efficient.”