New era for trade finance
19 September 2018
Having seen many proofs of concept and pilots, the trade commodity finance industry is ready for action with the launch of komgo, a blockchain-based venture that will transform the sector.
“We can now achieve a long-term ambition to improve security and operational efficiency in the commodity trade finance sector,” said Toon Leijtens, chief technology officer of komgo.
It will radically simplify and accelerate trustworthiness, auditability, and accessibility to trade financing across the industry.
ING is one of the 15 banks, commodity houses and trading companies involved in its creation.
The launch of komgo follows a number of successful experiments, including two blockchain-based proofs of concept tested on ING’s Easy Trading Connect platform in energy and soft commodities trading (Easy Trading Connect 1 and Easy Trading Connect 2), and Vakt, announced in 2017 – another blockchain-based platform that manages physical energy transactions from trade entry to final settlement.
“The potential of distributed ledger technologies (DLT) to transform the commodities sector is clearly evidenced with the success of the Easy Trading Connect experiments,” said Leijtens.
Komgo will continue to strengthen the security of the now still traditional paper-based administration in trade finance. Scheduled to go live in November 2018, it will offer two products to service the energy, soft and metals commodity sectors. One standardises and facilitates the Know Your Customer process while the other is for digital letters of credit.
Apart from being more efficient – the time spent on processing documents and data can be reduced by up to five times -- applying blockchain technology in trade commodity finance increases safety. The main benefit of blockchain is its immutability – once information is in the blockchain it can never be changed – which prevents cyber attackers from corrupting the database.
Read the press release to find out more about komgo.