Standard Chartered announced news on Wednesday (August 29) that it is teaming up with Siemens Financial Services, the financing arm of Siemens, and TradeIX, a digital trade provider, to conduct the first client pilot to create an end-to-end blockchain-based smart guarantees proposition in trade finance.
In a press release covered by Finextra, Standard Chartered said the aim is to transform the paper-intensive bank guarantees business via blockchain. The bank said its the first blockchain client pilot that fully digitizes the process from the start of the bank guarantee to the claim handling.
“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,” said Motasim Iqbal, head, Transaction Banking UAE, Standard Chartered, in the press release.
According to Standard Chartered, a commercial bank guarantee is easier to digitize than, say, a letter of credit that involves multiple parties and reams of documents. The bank said the blockchain pilot will enable Siemens to digitize its guarantee process for customers with large transaction volumes — in the future covering insurance, amendments and claims and eliminating the inefficiencies that are present today.
“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 arenas. This will streamline our processes and make our trade finance operations smoother, faster and more efficient. We are delighted to partner with Standard Chartered in leading such game-changing transformation, which will help our customers go digital in their guarantee and claim processes and achieve higher efficiency,” said Michael Bueker, chief financial officer, Siemens, in the same press release.
Standard Chartered said the pilot started in March 2018 and will be completed by the end of the year. The proposition is based on auto-executing smart contracts, leveraging the Corda Distributed Ledger and application layer provided by TradeIX.