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Financial Supply Chain

In the world of international trade, the process of exchanging payments, information and documents between buyers, sellers, banks, and other involved parties is becoming increasingly important for financial institutions. This community aims at presenting views and innovative ideas related to this financial supply chain space.

Digitisation: the key to distributed ledger and SWIFT BPO

17 February 2016  |  2807 views  |  0

What cloud has done for infrastructure, platform and software block chain will do for transactions and settlement. I am talking about the turning point in technology. In global business the two aspects that makes transactions and settlement a nightmare is the time lag leading to reconciliation. Reconciliation in a way verifies for all parties the integrity that a transaction has ocurred and settled as required; this delineates transparency.

Bitcoin has and will continue to have sceptics, Block chain technology (unintended consequence?) as a distributed ledger is here to stay and transform the financial industry; regulators appear to be happy as well. It all comes down to investment to get started on block chain distributed ledger. Any investment must have a pay off. The new model that is evolving- coopetition between technology innovators (startups) and financial institutions is opening up interesting possibilities. This is giving the financial institutions the agility from business strategy standpoint. Some institutions have gone a step further by internalising the startup culture with same focus.

Current times are digital times. No denying that. Digitisation is the back bone for block chain distributed ledger. As a long time trade/treasury banker I am biased to choose SWIFT BPO as an example to 'wild think' on the potential. The success of BPO is directly in proportion to adoption by all parties to a trade finance transaction. A few examples of the paties are Sellers, Buyers, sellers bank, buyers bank, transport companies, quality assurance agencies, government agencies, third party enablers. In the permissioned block chain architecture (similar to a private community cloud) the parties will be the nodes. They have legitimate access to digital business flows.   The block chain distributed ledger will give solid authencity to baseline establishment, amendments to baseline, dataset submission. matching, intent to pay and other process steps. The transparency and simplicity can very well be appreciated. There is minimal business risk. This can further expand the scope for financiers when a BPO is issued by the obligor bank. An innovative investment banker can trade on the BPO as an asset class.

Exciting times ahead in the digital world of supply chain finance.

TagsInnovationTransaction banking

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