UBS, IBM Add Four Banks to Blockchain Project

The Batavia platform initiative started in mid-2016 with the objective of creating multi-party, cross-border trading networks for trade finance, developed using the Hyperledger Fabric Blockchain framework, which IBM has been involved in developing.

The addition of BMO, CaixaBank, Commerzbank and Erste Group to the group follows a successful proof-of-concept (PoC) development last year conducted by UBS and IBM. The six firms will collaborate on the platform’s development, with the goal of targeting pilot transactions with customers on the network in early 2018 to test and refine the platform.

“Conducting international trade, in particular, trade finance, is a very cumbersome, manual and paper-heavy process making it tricky for corporates to do documentary trade for cross-border transactions,” Beat Bannwart, head of strategic innovation and market development, corporate and institutional clients at UBS, tells WatersTechnology. “We wanted to re-design the process in order to make it much simpler for our clients to do international business. Distributed-ledger technology (DLT) is particularly fit for purpose in international trade where there are many stakeholders involved.”

The international trade finance process, whereby banking institutions fund and support import and export entities, can incorporate parties such as funding bodies, buyers, sellers, transporters and inspectors all keeping separate records.

The Batavia platform aims to replace the existing process with an open, DLT-based system incorporating the use of smart contracts, automating and digitizing trade finance agreements on a permanent ledger that can be viewed and access by all involved parties.

Bannwart says that while the project has focused on the trade finance space to demonstrate the use of DLT for a specific business requirement, it may serve as a foundation for similar use-cases in future.

“The goal of this project was to verify whether a new and better client experience can be created by leveraging smart contracts”, he says. “We didn’t want to just put existing workflows on a distributed-ledger because that wouldn’t have brought any client benefits in our view. Eventually, the technology could be replicated to other use cases which have a multi-stakeholder involvement and where automation can be achieved through a smart-contract, conditionally executing transactions against pre-defined rules.”