Blockchain in Trade Finance

Blockchain for Trade Finance

The blockchain-based trade network is used to improve trade finance by helping the banks access new markets by reducing risks and streamlining cross-border with new products for buyers and sellers to grow their business in other countries. 

A recent survey reveals the growing emphasis on technological transformation within the banking sector.  Over half of participating banks (54%) highlighted blockchain, digital trade, and online trade platforms as vital areas of development and strategic focus for future growth. Additionally, these institutions recognize the potential of digitization, with more than 50% believing that an increasing number of trade documents could transition from traditional paper formats to digital alternatives.

Features of Blockchain in Trade Finance

Efficiency

Blockchain technology has the potential to transform trade finance by enabling transactions to be completed directly between relevant parties, eliminating the need for intermediaries. This streamlining of the process can lead to significant gains in efficiency.

Traceability

By integrating blockchain technology, trade finance facilitates real-time tracking of goods and assets for both exporters and importers.

Auditability 

Blockchain technology revolutionizes trade finance by providing a seamless and permanent record of every transaction, enabling effortless and comprehensive auditing for the entire transaction history.

Transparency

Blockchain technology in trade finance enables the synchronized recording of transaction details according to pre-agreed business terms. Utilizing a decentralized network allows for secure and transparent data sharing among participants, backed by the immutability of the blockchain. This significantly minimizes the risk of data manipulation, ensuring the integrity of trade finance processes.

Proven Benefits of Blockchain-based Trade Finance

Benefits of blockchain in trade finance for banks,

• Explore innovative financing solutions and alternatives to traditional instruments like letters of credit, expanding your service offerings and attracting new clients.

• Cater to underserved segments like small and medium enterprises (SMEs) and open account trading businesses, fostering financial inclusion and market growth.

• Gain valuable insights into client financial health and transaction history, enabling informed decision-making and risk management.

• Eliminate paper-based processes, streamlining workflows and significantly reducing operational costs.

• Accelerate financing approvals and trade cycles, improving overall business agility and client satisfaction.

Benefits of Blockchain in trade finance for buyers and sellers

• Instead of tiring traditional ways, accessing trade finance products and services is more easily offered by the respective banks

• It reduces the risk of non-payment by new buyers

• Track every stage of your trade deals from start to finish for enhanced transparency and control.

• Expand reach and scale business by accessing a wider network of partners in global markets.

• Streamline processes with digital solutions and automation, streamlining workflows and saving valuable time.

Advantages of Blockchain in Trade Finance

• Real-time review

• Transparent Factoring

• Disintermediation Reduced counterparty risk

• Decentralized contract execution

• Proof of ownership

• Automated settlement and reduced transaction fees

• Regulatory transparency

Applications of Blockchain Trade Finance

• Blockchain and Letter of Credit (LC)

• Blockchain and Forfaiting

• Blockchain and Invoice Factoring

• Blockchain and Trade Credit Insurance

Why choose Osiz as your Blockchain Development Company?

As a leading blockchain development company, Osiz does market research and analysis and shares ideas on how to make blockchain in trade finance. With more than 15 years of experience in blockchain, we have a competent team of professionals who help you to build blockchain solutions in trade finance. 

Get in touch with our blockchain experts and start integrating blockchain solutions in your banking and finance business.