Blockchain boosts commodity trading and financing

The digitisation of international trade is stepping up a gear thanks to Blockchain technology. The projects led by Societe Generale and its European partners are at the forefront of this shift. We take a closer look at this new technology and its numerous impacts on trading and financing.

 

Blockchain refers to the data storage and transmission technology used most famously by the bitcoin cryptocurrency: encoded, authenticated transaction blocks are linked together to form a huge, unforgeable record. What are the stakes? A secure exchange and negotiation process for every stakeholder, with significantly smoother transactions that can be traced, thanks to high-speed, automated verification operations.

Commodity trading and financing: a secure chain offering enhanced performance

The finance trade, or financing of international trade, which involves a wide range of players and a lengthy process subject to a limited number of regulations, is a perfect match for blockchain technology.  Until now, the high number of players involved made it difficult to digitise the process at global level.

Thanks to blockchain, all the participants at every stage in the process can be confident that their actions are perfectly secure.  At European level, Societe Generale is playing a central role in the development of this solution via a range of tools:

  • komgo SA, 15 of the world’s largest institutions, including banks, trading companies, an inspection company and an energy major have formed a new venture seeking to digitalise the trade and commodities finance sector through a blockchain based open platform;
  • We.Trade, a distributed platform enabling secure account flows between European SMEs;
  • Newco, an energy post trade platform digitalising the sales contract and physical flows processes;
  • EASY TRADE CONNECT, an extension of our research on the digitalisation of the energy trade finance value chain with the completion of a new prototype tool for soft commodities, in partnership with ING, ABN Amro and Louis Dreyfus Company. To help you get to grips with this new system and the advantages it offers in terms of speed, security and cost, take a look at the example of a 100%-digitalised soybean shipment transaction.

Blockchain technology, the essential raw material for new-style international trading

Societe Generale’s goal: to construct an entire ecosystem for the financing of international trade. These new tools are fundamental components, each of which meets a different need:

  • All stakeholders: We.Trade covers a range of businesses from diverse sectors across Europe, with the aim of offering a new solution to Societe Generale customers who lack simple means of ensuring their business transactions are secure;
  • Flexibility and a paperless world: in the raw materials sector, the Group is now able to conduct the entire process online, incorporating specific events for each type of negotiation, thereby replacing transactions currently conducted with paper documents.

The financial sector and technology are ready to move forward together. In 2018, solutions that were only in the pilot phase are now moving into production mode. Cooperation and experimentation are key success factors when it comes to transforming the way trade is financed. Embedded Blockchain and international trade video.

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Easy Trading Connect using Blockchain

komgo: using blockchain to transform commodities trade finance

Fifteen of the world’s largest institutions, including banks, trading companies, an inspection company and a major energy firm have formed a new venture known as komgo SA, that seeks to digitalise the trade and commodities finance sector through a blockchain based open platform.

Read the press release