We announced the world’s first application of distributed ledger technology for trade finance
Standard Chartered Bank, DBS Bank and Infocomm Development Authority of Singapore (IDA) have successfully completed a proof of concept (PoC) delivering the world’s first application of distributed ledger technology to enhance the overall security of trade finance invoicing. Leveraging distributed ledger technology, the initiative will reduce risk around duplicate invoice financing for banks while preserving client confidentiality.
Gautam Jain, Global Head, Digitisation and Client Access, Transaction Banking, Standard Chartered, said: “This success lays the foundation for harnessing technology to achieve greater goals in the banking industry. As the world’s leading trade finance Bank, we continue to innovate and develop solutions to solve real world issues and more importantly contribute to the overall digitisation of trade and trade finance. We will continue to look at ways to collaborate and contribute to the overall growth of the industry.”
The PoC marks an important milestone in the digitisation journey of trade finance and the revival of global trade. With enhanced security brought into the overall process, it reduces the systemic capital risks arising from duplicate invoices between lenders in a market. This creates a more conducive trading environment which in turn should encourage more trading activities using invoice financing.
Lum Yin Fong, Global Head, Client Management and Implementation, Global Transaction Services, DBS Bank, said: “DBS is committed to innovating and shaping the future of banking to make banking easier and more seamless for our customers. This cuts across our different businesses and this proof of concept is another important milestone for the franchise. Trade finance is traditionally a paper-intensive process but with the use of distributed ledger technology, we can now digitise and authenticate records. This could revolutionise and transform trade operations, enhancing risk mitigation and creating more efficient processes for both corporates and banks.”
The initiative allows banks to convert invoices into digital assets on a distributed ledger. This gives the participants the ability to access a single source of information for the status of invoices seeking financing across all the participating banks while preserving client and commercial confidentiality. This is done by utilising distributed ledger technology as a means to prevent duplicate financing of the same invoice by different banks. Further, the initiative is envisaged to be an open ecosystem where neutral third parties can participate and verify the authenticity of the related trade documents being financed; further reducing the risk of financing duplicate invoices.
Khoong Hock Yun, Assistant Chief Executive, Development Group, IDA, said: “As we build Singapore into a Smart Nation, we are also working closely with the financial sector to enable innovations that can help increase Singapore’s competitiveness as a global trading hub. It is essential for strong public-private sector partnerships to flourish to create a Smart Financial Centre with world class leading edge solutions that benefit our businesses.”
Jacqueline Loh, Deputy Managing Director, Development and International, FinTech and Innovation Group, MAS, said: “Given Singapore’s role as a leading global trade finance and fintech centre, banks based here are well positioned to twin these two strengths to improve efficiency and strengthen risk management. This POC demonstrates the innovative spirit of Singapore’s Smart Financial Centre to leverage distributed ledger technology to support economic trade – which is the lifeblood of Asia’s economy.”
In the next phase of the project, the working team will be looking at widening the participation to include other industry stakeholders, including government agencies such as Singapore Customs and other banks based in Singapore, to join as partners and contribute to the commercial adoption of this initiative.
For further information please contact:
Hsueh-Mei Tan
Head of Corporate & Institutional Banking Communications
Standard Chartered Bank
+65 6596 9289
tan.hsueh-mei@sc.com
Gwen Lee
Group Strategic Marketing & Communications
DBS Bank
+65 6878 5060
gwen.lee@dbs.com
Note to Editors
About DBS
DBS – Living, Breathing Asia.
DBS is a leading financial services group in Asia, with over 280 branches across 18 markets. Headquartered and listed in Singapore, DBS has a growing presence in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s capital position, as well as “AA-” and “Aa1” credit ratings, is among the highest in Asia-Pacific. DBS has been recognised for its leadership in the region, having been named “Asia’s Best Bank” by The Banker, a member of the Financial Times group, and “Best Bank in Asia-Pacific” by Global Finance. The bank has also been named “Safest Bank in Asia” by Global Finance for seven consecutive years from 2009 to 2015.
DBS provides a full range of services in consumer, SME and corporate banking activities across Asia. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. These market insights and regional connectivity have helped to drive the bank’s growth as it sets out to be the Asian bank of choice. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. The bank acknowledges the passion, commitment and can-do spirit in all of our 21,000 staff, representing over 40 nationalities. For more information, please visit www.dbs.com.
About Infocomm Development Authority of Singapore
The mission of the Infocomm Development Authority of Singapore (IDA) is to develop information technology and telecommunications within Singapore with a view to serve citizens of all ages and companies of all sizes. IDA does this by actively supporting the growth of innovative technology companies and start-ups in Singapore, working with leading global IT companies as well as developing excellent information technology and telecommunications infrastructure, policies and capabilities for Singapore.
For more news and information, visit www.ida.gov.sg or follow us on Twitter @IDA_SINGAPORE.