Blockchain As a Cure for Trade and Finance Spheres
Note: The following article is based on the report by EU Blockchain Observatory and Forum.
Many people in the trade finance industry see blockchain as a useful tool to streamline processes. One way is simply by catalyzing digitization by offering a means of enhancing trust in digital documents and transactions.
This in turn could increase the speed of such transactions as well as their security, facilitating financial flows between counterparties.
Blockchain-based digital identities could also help streamline know-your-customer and other compliance requirements.
Moreover, blockchain could also help catalyze innovation in the trade finance sphere. It could provide enhanced transparency into supply chains and stakeholders, potentially enabling new kinds of financial instruments. It can facilitate automatic payments through smart contracts, as well as provide far greater auditability of transactions. This could in turn streamline reporting, accounting and other processes, as well as lead to better intelligence as to the state of markets. This could be of interest both to the actors along the supply chain as well as authorities.
Again, according to Deloitte, potential benefits include:
- Real-time review
Financial documents are linked and become accessible through blockchain, and are reviewed and approved in real time, which reduces the time needed to initiate shipment.
- Transparent factoring
Invoices accessed on blockchain provide a real-time and transparent view into subsequent short-term financing.
- Disintermediation
Banks facilitating trade finance through blockchain do not require a trusted intermediary to assume risk, eliminating the need for correspondent banks.
- Reduced counterparty risk
Bills of lading are tracked through blockchain, eliminating the potential for double spending.
- Decentralised contract execution
As contract terms are met, status is updated on the blockchain in real time, reducing the time and headcount required to monitor the delivery of goods.
- Proof of ownership
The title available within blockchain provides transparency into the location and ownership of the goods.
- Automated settlement and reduced transaction fees
Contract terms executed via smart contracts eliminate the need for correspondent banks and additional transaction fees.
- Regulatory transparency
Regulators are provided with a real-time view of essential documents to assist in enforcement and AML activities.
All these benefits are closer than you may expect: Tozex’s agnostic approach towards blockchain lets all these benefits be implemented, not just discussed. Exclusive smart contracts, advanced KYC system, real-time operations, transparency, decentralization and the most user-friendly ecosystem are ready to provide the users with the most technologically advanced solutions.
Read the full report at https://www.eublockchainforum.eu/sites/default/files/report_supply_chain_v1.pdf , and don’t forget to visit https://tozex.io/ to see how these potential benefits of blockchain become real!
