UBS launches a Hyperledger blockchain prototype that uses smart contracts to reduce international trade letter of credit processing from seven days to one hour

UBS launches a Hyperledger blockchain prototype that uses smart contracts to reduce international trade letter of credit processing from seven days to one hour

Swiss bank UBS has launched a prototype of a project that aims to replicate the entire lifecycle of international trade transactions on Hyperledger’s Fabric blockchain.

The project is a joint effort between UBS and IBM. The trade finance project is still in its early stages of development, but it can be said that this project is more ambitious than many other blockchain prototypes. The prototype is designed to be "holistic" in combination with payment transactions, integrating trade finance transactions, foreign exchange payments, etc. into a carefully crafted smart contract.

According to Beat Bannwart, head of product and market development at UBS's transaction bank, the project involves all of UBS's experts in these areas.

Bannwart said:

“Our project is focused on transaction banking, so we brought in people from UBS in trade and supply chain finance. But the aim is to merge all the different steps into one solution that will cover the entire business flow.”

In large transactions, the buyer's bank can use letters of credit to mitigate the seller's perceived risk in the product transition process. But letters of credit can take up to seven days to process, during which time additional risk can accumulate, according to UBS.

How complicated is the use of letters of credit? UBS said that a letter of credit weighs 500 grams and contains 36 documents.

But by programming the process into a smart contract on Hyperledger, Bannwart said he expects to be able to reduce processing time from seven days to one hour.

In addition to the letter of credit process application, UBS said in a video presentation at the Sibos conference held on Wednesday that the project will also include account opening processes.

Bannwart said:

“It’s complementary. The program doesn’t replace any procurement party or negotiation party, it’s purely for execution and monitoring, so we save them time and you can use the program happily.”

Financial technology startups bring rapid iteration

UBS emphasized ease of use throughout the video presentation, with the focus on the project's goal of creating a user-friendly interface that would work non-stop.

To take this design thinking forward, much of the work on the project was done during a two-day workshop at London-based financial technology accelerator Level 39.

During the creation of the project, representatives from the IT department of UBS and employees of the IBM Competence Center completed the transition from the visualization stage to the product creation stage.

Fabio Keller, an IBM account executive who led UBS's integrated accounts team, described the creation as "a group of exceptional people sitting around a table, locked in a room, thinking things out."

According to Alex Batlin, senior innovation manager at UBS, the participants are all startups from the Level 39 accelerator, including cloud blockchain startup Credits and smart document startup Clause Match.

Batlin said that although these startups have not yet signed any cooperation contracts with UBS, their participation is part of UBS's larger strategy.

He said:

“We made a very conscious decision that we wanted to make sure that what we learned was being used while also mentoring these startups.”

Time frame unknown

Reports of UBS’s blockchain work have percolated across the web over the last year, including that the bank was conducting multiple blockchain ‘trials’.

As reported last month, a five-member consortium is working on a practical ‘settlement coin’ designed to help central banks embrace the functionality of blockchain, one of which is UBS.

Furthermore, it is still unclear how long it will take to complete this international trade project.

But Keller said one thing is clear.

UBS plans to bring the prototype to consumers and end users in the hope of "validating" that the bank is "going in the right direction."


<<:  The second generation of the Internet is coming: blockchain distributed Internet

>>:  Bitcoin brings needed peer-to-peer payment system to mesh networks

Recommend

Does a man with thick upper lip and thin lower lip have a serious mind?

Does a man with thick upper lip and thin lower li...

Palmistry for money leakage

I believe many people have heard of the term &quo...

What kind of man is a master of love?

What kind of man is a master of love? 1. A good m...

Jin Zizai's fortune-telling - Asking for the name in the ear

The ears represent name and fame, and are also th...

How to interpret a man's fierce personality

The irritable side of a person is actually quite ...

What kind of face is successful in career

We all hope to achieve some success in our career...

What kind of people have the worst luck?

A person’s fortune can be seen from his face; so,...

What mistakes are you most likely to make?

What mistakes are you most likely to make? People...

What is the fate of a woman with splayed eyebrows?

Classic fortune-telling: Detailed prediction of y...

Where do IoT and blockchain intersect?

In the next few years, the Internet of Things wil...

Let’s talk about: Sidechain, Drivechain and Rootstock two-way hook design

In a recent technical paper, we analyzed differen...