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Treasury

Can blockchain fight trade finance commodities fraud?

Banks and traders tout efficiency and the trust benefits of a new fintech platform, but key absentees mitigate the hoped-for 'network effect'.

Commodities traders and banks on a new blockchain platform launched this autumn hold strong views on how the technology could soon transform their business. But the scheme is not without its challenges.

Based in Geneva, komgo stands out for its focus on commodity trade finance; a niche sector dominated by an increasingly tight group of traders and banks, many of which are also in the Swiss city.

komgo has brought in a relatively large number of the industry’s biggest players.

The co-founders are the top five commodity trade finance banks by market share according to FImetrix: ABN Amro, BNP Paribas and Rabobank, as well as ING and SocGen.

Other investors include large energy traders Gunvor and Mercuria, Shell, Koch Supply & Trading, and inspection and verification company SGS.

Tawfik Sadfi, Gunvor’s head of structured trade finance, hopes komgo will therefore enjoy “a network effect” in transforming the sector.

“I believe blockchain will be the future,” he says. “It can work for our industry. It’s just a matter of time.”

Cost savings

Others agree that blockchain could be a game changer for commodity trading, which is still almost entirely done by paper.