The National Bank of Canada has announced the successful completion of a pilot program in collaboration with IT firm CGI and blockchain startup Skuchain to use blockchain technology in trade finance.
The initiative aimed at improving and streamlining the process for negotiating standby letters of credit and guarantees, the complex conditional agreements used by banks for securing financial transactions. These agreements are used across many industries to secure contracts and are currently conducted via email, making them prone to errors and delays.
Through an end-to-end, blockchain enabled process, National Bank of Canada said processing times are significantly improved, risks are reduced and customer relationships are strengthened.
By leveraging templates pre-approved by banks and negotiations on a distributed ledger, the integrated platform automates the coordination necessary to issue a standby letter of credit or guarantee. The streamlined process offers visibility across the lifecycle, lower costs for all parties, increased security and more effective collaboration.
“This pilot project is a great opportunity to leverage blockchain technology to simplify the process for negotiating standby letters of credit and guarantees while making it more transparent and secure,” said[1] Patrice Roy, vice president of payments, cash management and international solutions at National Bank of Canada. “This will enable us to offer a simple, fast and efficient experience to our commercial clients which facilitates managing their business.”
The project involved CGI integrating its CGI Trade360 trade finance platform with Skuchain’s Contract Builder, an application built on the startup’s Brackets platform for smart contracts on a blockchain.
The integration enabled National Bank of Canada to provide trade finance services digitally to customers conducting business on a blockchain B2B solution. In particular, customers were able to initiate, conduct and conclude negotiations of standby
