Barclays Executes Letter of Credit Transaction on Private Blockchain

These are exciting times for blockchain technology. Barclays, a world-renowned bank, and Wave, one of their accelerator graduates, conducted a live test of distributed ledger technology. A Live Letter of Credit transaction was performed and completed.This is a significant validation of blockchain technology.

Wave is a company dedicated to bringing distributed ledgers to the financial sector. Ever since being part of Barclays’ accelerator programme, the startup has been exploring new use cases. Two regions are targeted for these concepts, the United Kingdom, and South Africa. This is not surprising, as Barclays is a big player in both countries.

Barclays Is Excited About Wave and Their Blockchain

To be more precise, Wave focuses on combining documents with blockchain technology. Mainly trade documents are being used, as those are often prone to human error. Moreover, it is easy to forge transport documents these days. Distributed ledgers will make all of those concerns go away. Moreover, this approach will be beneficial to international trade over the coming years.

Barclays took an immediate liking to Wave due to the potential for cutting costs. Courier costs alone are quite expensive for the bank. Moreover, completing end-to-end trade finance transactions take several days right now. Using distributed ledgers, that period can be reduced to mere hours.

Barclays Global Head of Trade and Working Capital Baihas Baghdadi stated:

“One of the biggest headaches in global trade currently is the vast movement of paper required to facilitate transactions, with multiple organisations in the chain. That is why we’ve been very keen to partner with Wave in using blockchain technology to save time and money for our clients, and potentially transform trade finance for businesses around the world.”

Trade finance is entrenched in paper documents these days, as it had been for decades. Using smart contracts on top of blockchain technology could address most of the market inefficiencies. While the test of Wave’s system was successful, Barclays is seeking other partners to adopt this system.

Source: Finextra

Header image courtesy of Shutterstock