SMBC joins blockchain platforms Contour, Komgo for trade finance
SINGAPORE, NNA - For next-generation banking efficiency, Sumitomo Mitsui Banking Corp. is accelerating its adoption of blockchain technology for trade finance amid increasing digitization of international trade.
With added push by the disruptive COVID-19 menace, the Japanese bank, known as SMBC, has joined two blockchain-based trade finance platforms - Singapore-based Contour's Beta Network and Swiss network Komgo.
SMBC, the first Japanese bank to join Contour, is reportedly also in the process of launching the Marco Polo trade digitization platform which will streamline operational processes.
As supply chain disruptions caused by the global COVID-19 pandemic have created challenges for banks, it has become more crucial to digitize trade finance.
“The disruptions across the globe to normal working patterns arising from the COVID-19 pandemic have further highlighted the need for digitization of paper-based trade processes to enable businesses to function effectively even in times of contingency,” said SMBC in a press release on Tuesday.
Singapore’s Contour Pte. Ltd. commercially launched the Contour network in January after a series of live testing with more than 50 banks and corporations.
The Contour digitizes the whole trade finance workflow and transactions, making it much faster compared to cumbersome paperwork. For instance, the processing time for Letters of Credit can be shortened from the required 5 to 10 days previously to under 24 hours now.
“Going forward, we will ask our clients to use the Contour trade platform. Initially, that will be our Japanese corporate clients,” a spokesman for SMBC told NNA.
SMBC has also agreed to use Komgo, the world’s first blockchain-based platform for commodity trade. It has 18 of the largest global banks, trading companies and oil majors as its shareholders.
Both Contour and Komgo are designed to achieve high work efficiency and transparency. Other advantages of blockchain platforms are enhancing risk mitigation and acting as one-stop place for all trading needs.
SMBC has been gearing up for digitization and participated in trials. Last year, the bank and major Japanese trading house Mitsui & Co. completed a Proof of Concept (PoC) by using Marco Polo, a blockchain-based trade finance platform developed by U.S. firm R3 LLC and Ireland’s TradeIX Ltd.