ING and SocGen make blockchain-based oil trade
22 February 2017 | 14789 views | 0
ING and Societe Generale have teamed up with commodity trading house Mercuria to test the use of blockchain technology for a live oil trade.
Blockchain tech was used to sell an oil cargo shipment containing African crude three times on its way to China, with traders, banks as well as an agent and an inspector, all performing their role in the transaction directly on the 'Easy Trading Connect' platform.
Easy Trading Connect was last year’s winner of ING's Innovation Bootcamp, in which employees are challenged to come up with smart ideas for transforming banking. Teams with the best ideas are given the chance to turn their idea into reality with help of ING’s Innovation Studio.
With commodity trading and finance still heavily reliant on physical paper documents making their way across the globe, the partners say that the industry is ripe for an overhaul. The experiment found that by making efficiency gains in certain processes, the average total time for a bank to complete its role in the transaction could be slashed from approximately three hours to 25 minutes.
In addition, applying distributed ledger technology to the commodity trade financing chain can prevent issues such as documentary fraud and allows for the digitalisation of assets, claim the pilot participants.
Patrick Arnaud, MD, trade and commodity finance, ING, says: “The commodity finance industry is hampered by nature by inefficiencies and outdated procedures. By applying blockchain technology, we expect that we can eliminate a lot of these, making the overall process faster and more cost effective and the tests we have been able to carry out have proved this."
Federico Turegano, global head, natural resources and infrastructure, Societe Generale Corporate & Investment Banking adds: "The Easy Trading Connect platform allowed real-time access to information for all parties, eliminating the need for an acknowledgment process. It also keeps a full data record, which is useful for auditing and as well as having an intuitive navigation system and a well thought through design."