National Bank of Canada has teamed up with tech giant CGI to pilot a blockchain platform for negotiating standby letters of credit and guarantees.
The pilot is designed to streamline the process for negotiating the complex conditional agreements used by banks for securing financial transactions, which are currently conducted via email, often leading to errors and delays.
CGI integrated its trade finance platform with technology from blockchain startup Skechain. This lets National Bank of Canada offer customers trade finance services digitally, initiating conducting and concluding negotiations of standby letters of credit and guarantees entirely on smart contracts.
This end-to-end, blockchain-enabled process will improve processing times and reduce risks, claim the partners. By using templates pre-approved by banks and negotiations on a distributed ledger, the platform automates the coordination necessary to issue a standby letter of credit or guarantee.
Patrice Roy, VP, payments, cash management and international solutions, National Bank of Canada, says: "This pilot project is a great opportunity to leverage blockchain technology to simplify the process for negotiating standby letters of credit and guarantees while making it more transparent and secure.