Blockchain takes back seat in drive to digitize Asian trade finance

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By:
Paul Golden
Published on:

Singapore-based trade finance portal CamelOne has put blockchain on the backburner to get to market more quickly.

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CamelOne is a multi-bank portal designed to support trade finance applications from companies for all participating banks.

But unlike other trade finance platforms such as we.trade and Komgo, CamelOne is not built on blockchain – perhaps surprising, given Euromoney reported earlier this year that more than 30 groups of banks and other financial institutions are working on systems for incorporating distributed ledger technology into trade finance.

John Khaw, project director at vCargo Cloud, the company that developed the technology behind the portal, explains that concern over connectivity between the nine participating banks – ANZ, BNP Paribas, DBS Bank, HSBC, ICBC, MUFG Bank, OCBC, Standard Chartered Bank and UOB – was behind the decision to proceed without distributed ledger technology.

“We still believe there is value to be unlocked by adopting blockchain,” he says. “We are currently working with some strategic partners on trade-related projects that are using blockchain technology and we will consider integrating blockchain into future versions of the portal.”

However, Khaw says that although there are solutions that facilitate interconnectivity across different platforms, these solutions are still relatively new and that when working in conjunction with so many partner banks, reliable interconnectivity is crucial.

“Banks endorse and work on different blockchain platforms,” he adds. “Therefore, we decided to launch our portal before working on integration with any blockchain platform. As the portal sits on the NTP it already provides the level of authentication and verification that we need.”

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John Khaw, vCargo Cloud


Asian trade finance

CamelOne allows business users on Singapore’s Networked Trade Platform (NTP) to apply for up to twelve different trade finance products via standardized forms in a secure format and receive real-time status updates on their applications.

The portal is just one of a number of digital trade finance initiatives at various stages of development across Asia. Last month, the Joint Standing Committee of Commerce, Industry and Banking in Thailand confirmed that it had completed a trial of blockchain technology on its National Digital Trade Platform project. In the longer term it hopes to connect its platform to the NTP and other similar projects across the region.

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Sofia Hammoucha, BNP Paribas 

The NTP is also collaborating with MUFG Bank and NTT Data Corporation on a proof-of-concept prototype using blockchain technology to connect the Singapore trade platform with a similar platform NTT is developing for Japan.

In the meantime, the Monetary Authority of Singapore and the Hong Kong Monetary Authority continue to work on the Global Trade Connectivity Network – a cross-border open trade finance network based on distributed ledger technology – to digitize trade and trade finance between the two cities.

The NTP, which was launched in September 2018 to connect trading companies across Singapore to domestic and overseas counterparties digitally, also has a document repository that allows documents to be transferred between parties securely.

Khaw acknowledges that development costs would have been higher if the portal had been built on blockchain but says the user experience was a more important consideration.

“If blockchain offered an undeniable advantage for our solution we would have had no hesitation in implementing it, as we have done with the electronic certificate of origin solution that we have developed in collaboration with the Singapore International Chamber of Commerce,” he adds.

Sizeable target market

CamelOne has a sizeable target market. According to data from Singapore’s Department of Statistics, the country’s total trade volume was worth more than S$89 billion in October, of which approximately 40% is facilitated by trade finance banks.

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Sriram Muthukrishnan, DBS

Benefits to users include the re-use of data through document exchange on the NTP and the ability to submit trade finance applications to multiple banks at the same time via a single user interface. A duplicate invoice check feature is designed to prevent double-issuing of invoices.

The advantages for banks include access to more information to better understand the underlying trade application, automation of compliance screening and reduced reliance on customers providing physical documents as transaction evidence, says Khaw. “They can also have greater confidence in the authenticity of documents provided by customers,” he adds.

Sofia Hammoucha, head of transaction banking southeast Asia at BNP Paribas, says the portal complements the bank’s existing trade finance offerings. “CamelOne is intended to be the centre of the trade ecosystem and therefore relevant to all players in the trade business, irrespective of size or role in the ecosystem,” she says.

According to DBS Bank’s head of trade product management, Sriram Muthukrishnan, access to the NTP means small and medium-sized enterprises will be able to tap into services such as cloud-based enterprise resource planning which are usually affordable only for businesses of much greater scale.