Overview

Trade Finance

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How can Blockchain solve the $1.5 trillion dollar problem in Trade Finance?

Context & Challenges

In 2018 the World Economic Forum said the trade finance gap stands at $1.5 trillion and could become $2.4 trillion by 2025.  But one study suggested blockchain could reduce this by $1 trillion through smart contracts and a distributed infrastructure.  80-90% of global trade relies on trade finance (American Express), and working with blockchain technology firms like BlockApps can increase transparency, increase participation, and lower risk.

This current challenge is due to various complexities in the process, such as its sprawl across multiple borders and jurisdictions, siloed data sources across multiple organizations, complete lack of trusted data, and its antiquated paper-based tracking system where multiple parties are holding the same records on different paper.

With the larger view of the ecosystem the reason for this gap becomes clear.

  • With a lack of trusted real-time data, banks and financial institutions have taken a risk averse approach to trade finance.
  • Companies who have qualified for trade finance still find a slow, and costly process to manage internally and within the ecosystem
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Solution from BlockApps

The Product Overview:

    1. Leveraging BlockApps STRATO’s private chains, each party on the system can define their own ecosystem.  Each organization can define what data and information they want to share, want to receive, and want to keep private.  This can be done at a macro and granular level which provides layers of 
    2. With our governance modules every private chain, every organization, every user, and the network at a macro level all operate under specific and unique rules for operational integrity
    3. By leveraging smart contracts and RESTful APIs, we can integrate risk evaluation tools and metrics, additional data sources and complex regulations alongside many separate data inputs from various organizations.

Implementation:

    1. In working with your organization we will map the following to the blockchain logic
      1. Business Processes
      2. User management rules
      3. Assets to be tracked on the chain
      4. Data sharing rules (on chain, off chain)
      5. Ecosystem defined (who is in your ecosystem and what levels of permissions each party has)
      6. Compliance/regulations
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Solution Benefits

  • Allow all parties to operate securely on a shared database updated in real-time
  • Close the supply-demand gap by streamlining processes
  • Simplifies the process to add new users and gather more data points
  • Provides transparency around the process as needed for participants
  • Provides digitized letters of credit, invoice, bill of lading, warranty of title, origin certificate, inspection certificate, declaration and insurance document with a full audit trail and real-time status of documentation
  • Lowers the manual effort around processing and analysis and increases the time spent on higher level, more complex transactions
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