Co-building a new standard for letters of credit
Voltron, a blockchain-based trade finance coalition, has swelled to over 50 banks and corporates following the completion of trials that simplify letters of credit. ING is a co-founder and co-creator.
An R3 initiative, the Voltron platform uses blockchain technology to process paper-based letters of credit in under 24 hours. Usually it takes five to 10 days. Importantly, Voltron adheres to rules set by the International Chamber of Commerce and aims to become the market standard for letters of credit.
Voltron’s technology provider CryptoBLK developed the solution, which resulted in five successful pilots. Two of these were driven by ING and HSBC (Cargill and Tricon). Ninety-six percent of participants said Voltron would accelerate their letters of credit process, improve efficiencies and reduce costs.
Perhaps not surprising for a company ranked fifth by
ING’s Chris Sunderman, blockchain initiative lead for trade finance, said the trial has been a great collaboration between banks and corporates, R3 and CryptoBLK. It ensures a better understanding of the possibilities and benefits of Voltron: the end-to-end digitisation of letters of credit.
“This will help in broadening the support base of Voltron and it will grow a larger and geographically well-spread network of banks to adopt it, enabling an increased number of transactions in the production phase," he said.
ING is also involved in a second project that aims to digitise documentary trade finance. Komgo concentrates on a specific standardised letter of credit contract for trade in Brent oil. ING sees Voltron and Komgo as complementary given that different sectors have different requirements.