Easy Trading Connect on the verge of digitalising an age-old sector
23 February 2017
Commodity trade and finance is still based on the exchange of paper documents. But that’s about to change. Easy Trading Connect is proof that the sector can be digitalised with blockchain technology.
This week at the International Petroleum event in London, the ING and Societe Generale Corporate & Investment banking teams presented the results of the first prototype – “Easy Trading Connect” - a new Trade Finance platform.
Current paper-based practices in the international commodity trade and finance sector have high costs and are subject to delays and risks. A small ‘typo’ can still reset the whole document process, and couriers may lose crucial files.
So, how can blockchain technology be used to modernize a process that dates back to the Middle Ages? To show that, the ETC team teamed up with Societe Generale Coporate & Investment Banking. Together they created and tested the first prototype of the platform. The prototype was tested on a real crude oil cargo shipment trade, which was sold three times on its way to China. All parties involved, traders, banks, inspectors and agents, performed their role in the transaction on the platform.
Faster, cheaper, safer
The experiment showed that the average time for a bank to complete their role in the transaction went from about three hours to just 25 minutes. For traders, efficiency went up 33 percent, with user experience evaluations far higher than expected.
As the prototype uses blockchain technology and is designed for paperless trade, the risks throughout the process have also been reduced.
“There have been many attempts to modernize trade, but no solution has gained broad traction until now,” said Patrick Arnaud, Managing Director for Trade & Commodity Finance at ING.
“We take a different approach. First, we use blockchain. Second, the team has taken an industry perspective to problems by looking at all parties in the process and not just one part of the chain. And third, we team up with the industry to create what’s really needed.”
“Digitalisation of trade is happening and will be here sooner rather than later. We cannot simply sit on the side-lines and wait for it.”