One of the most favorable industries for blockchain technology is trade finance. Many of the largest banks in the world devote time to their research and development.
Thanks to a consortium of 71 global financial leaders, R3CEV, much has been revealed about the potential applications of blockchain technology.
Since 2016, R3 has carried out several pilot tests in the market to complement its research. They will continue to improve these strategies until they are ready to fully enter the market.
So what are some of their findings of potential use? This is the future of trade finance with blockchain technology companies.
Monitor status and status in real time
One of R3’s members, CBA, is a leading participant in blockchain technology research. They are currently going through 3 different blockchain usage analysis projects.
They are running a trial run with exporters who ship cotton. Inside the box is a humidity monitor that is connected to IoT and GPS.
This monitor allows users to track their shipments with real-time status. Additionally, they can assess the status of their product as it passes through.
Other national blockchain technology companies are conducting pilot projects similar to this study. In Singapore, Hellosent conducts similar tests. However, they are looking into importing French wine.
Eliminate unpaid agreements
A growing problem for grain producers is financial loss due to commercial insolvency. An estimated $50 million was lost in 2014 due to this activity.
It takes approximately 4-6 weeks for the farmer to receive payment for their shipments. At the same time, conflicts often arise between farmers and buyers regarding payment complications (non-payment of the corresponding amount, late payment, etc.).
Australian startup, Full Profile, took matters into their own hands.
Their blockchain platform allows farmers to now receive automatic payment upon grain delivery. This will greatly reduce the risk of dispute between farmers and buyers.
Once Full Profile’s application is fully functional domestically, they will expand to foreign trade.
The use of blockchain technology can also be beneficial in reducing financial losses and risk. In further development, it will be able to digitize sales and legal arrangements.
Trade finance is a cumbersome industry that relies heavily on settlements and contracts. Currently, most of these agreements are handled the old-fashioned way: hard copies.
Blockchain technology will eliminate the need for this paper-based system. This ultimately reduces the risk of financial loss as documents are often lost, mishandled or tarnished.
Electronic documentation can be tracked much more efficiently. It also eliminates the need for a third-party verification system.
Interested in learning more about blockchain technology companies?
Blockchain technology creates transparency in financial trading between buyers and sellers. From the moment the order is placed to the payment, blockchain is able to simplify the trading process.
Do you want to jump into the world of international trade? You are in the right place. It would be great to know your thoughts and comments.