Germany’s Commerzbank, along with Turkish national bank Isbank and Germany’s Landesbank Baden-Württemberg (LBBW), are now among the first banks to execute a commercial transactions based on blockchain’s distributed ledger technology (DLT) with German and Turkish corporate clients in a live environment.
The purpose of these two successfully executed transactions was to establish an irrevocable payment commitment to the supplier, issued by the buyer’s bank.
The transactions were executed and processed using the Marco Polo trade finance network, operated by Irish technology firm TradeIX, on R3’s Corda blockchain platform. The network focuses on securing payments and financing of trade transactions.
The data required to establish the payment commitments for both transactions was exchanged in a digital format on the Marco Polo platform. With these live transactions, Commerzbank has reached a key milestone in the run-up to the market launch of Marco Polo Payment Commitment.
The first cross-border transaction took place on May 10, in cooperation with Isbank, between Germany’s Kuraray Europe GmbH and Turkey’s Sisecam. This involved the export of laminated special glass interlayers from Germany to Turkey. The payment by open account has been replaced by an irrevocable payment undertaking with digital exchange and matching of trade data.
The second transaction took place on May 20, in cooperation with LBBW and between pump and valve manufacturer KSB SE and technology group Voith, was Commerzbank’s first live transaction that involved the purchase of special couplings.
The payment commitment is based on the exchange and successful automatic matching of digital trade data in the DLT/blockchain network, thus providing financing options. A Marco Polo Payment Commitment is an irrevocable, abstract undertaking by the buyer’s bank to the supplier to make payment on the due date.
In June last year, Commerzbank and Isbank also had successfully piloted two international trade finance transactions based on blockchain’s DLT, along with Sisecam and Kuraray. Earlier in March 2019, a similar pilot was conducted that involved Commerzbank, LBBW, KSB and Voith. However, the latest is the first live transaction using the Marco Polo platform.
Launched in 2017, Marco Polo is a bank focused network of platforms offering ERP-embedded trade and working capital finance applications to their corporate clients. It is powered by open Application Programming Interfaces (APIs) and Corda blockchain technology.
Its network includes the world’s leading financial institutions such as Bank of America, BNY Mellon, Mastercard, ING, BNP Paribas, NatWest, Standard Chartered Bank, Natixis, Raiffeisen Bank and National Australia Bank, apart from Commerzbank,Isbank and LBBW.
The Marco Polo Network allows members to offer and access a complete suite of trade and working capital solutions. It provides reduced handling of physical documents, reduced reconciliation and resultant dispute reduction.
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