Some of the largest commercial finance banks, industrial entities and fintech companies are working on a major project to connect the growing number of independent blockchain networks in commercial finance.
Called Universal Trade Network (UTN), so far it has been little publicly known about the industry's initiative. GTR he brings you the details.
What is the universal trade network and who created it?
The UTN is a project started about a year ago by the blockchain companies TradeIX and R3 together with the banks involved in the blockchain project known as Marco Polo.
Marco Polo is made up of 12 international banks, making it one of the most influential consortia in commercial finance. TradeIX and R3 are currently working with this consortium to build a blockchain platform for the exchange of open accounts on the R3 Corda blockchain framework. After releasing this platform recently, the parties are now pursuing the next step in a broader ambition to establish a network of networks in commerce: the UTN.
UTN is specifically focused on commercial finance and aims to create open commercial and technology standards to promote interoperability between the numerous blockchain networks that have flooded the commercial finance space in the last two years.
Its creation comes when the list of blockchain-based platforms and commercial consortia continues to grow: Voltron, we.trade, komgo and Marco Polo, to name a few, are all trying to modernize a sector based on centuries-old paper and manual processes. But with each new initiative increases the risk of creating digital silos and separate systems that can not communicate with each other.
"For our account, there are more than 20 trade finance consortia and industry initiatives currently underway in the market, many of which involve the same entities and face similar products and processes," says Trade Cousin, Dani Cotti. GTR. "But there is a critical flaw with the current industry approach: each network will become a digital island that can not connect or transact with others without costly, cost-effective integration. takes time.The connected digital ecosystem that we have spent so much time and money to create will end up in the same place we left off. "
Who is involved?
The UTN Steering Committee has met since May of this year and involves some of the largest global trade finance banks and industrial bodies.
The fact that the project has so far been led by TradeIX and R3 is reflected both in the composition of the steering committee and in the initial attention of the UTN. GTR understands that the Steering Committee involves all 12 global banks that are part of Marco Polo: Anglo-Gulf Trade Bank, Bangkok Bank, BNP Paribas, Commerzbank, Danske Bank, DNB, ING, Natixis, Natwest, OP Financial Group, SMBC and Standard Chartered.
According to sources close to the project, the new Marco Polo members will automatically receive the status of observers on the board of directors of the UTN.
Meanwhile, members of Voltron, another Rope-based business finance platform, which focuses on digitizing the letter of credit, have been invited to participate in the project, which means that HSBC and NatWest are now also members observers of the steering committee.
The CordaCon-led R3 conference in London last month was one of the first forums where TradeIX shared the details on the UTN with the market. At the time, Cotti said that the UTN will focus primarily on the connectivity between the blockchain networks developed on Corda, referring to this as an obvious starting point. He added that Marco Polo will be the first network to adopt the standards that come out of the UTN.
Ultimately, however, the goal is to make UTN-agnostic technology. This means that it will also focus on interoperability with networks work on rival blockchain frameworks (like Hyperledger Fabric), as well as non-blockchain networks.
The group is also open to anyone who wants to participate, says Alisa DiCaprio, global head of research and trade in R3 GTR. "It has always been a group open to other people who come together, even if the genesis was the Marco Polo project, it would not make sense to create a standard body that was just Marco Polo, so over time we invited new organizations to participate," , adding that UTN members now also include non-Marco Polo / Voltron counters.
Likewise, UTN will try to attract other players in the commercial ecosystem, such as logistics service providers, companies, insurers, fintech companies and B2B networks.
"The main objective of this is to be as open and inclusive as possible, we have a list of new participants and we have contacted a number of other players," adds DiCaprio.
GTR he learned that organizations like Swift, Baft and the Asian Development Bank are also part of the UTN project, as is JP Morgan, a bank that is neither part of Marco Polo nor of Voltron.
How is UTN governed?
While the UTN has so far been led by TradeIX and R3, the parties are now trying to change the way the network is being ruled in the future.
As such, they are working to create an independent governing body by 2019, which will be responsible for maintaining the UTN by developing and supporting protocols, standards and frameworks. UTNO Call – Universal Trade Network Organization – will function as a separate legal entity with a board, working groups and membership structure in which banks and other actors in the commercial ecosystem can join as members in exchange for a financial commitment.
According to David Sutter, responsible for the TradeIX strategic platform, participants will make more details available on the USER at the beginning of next year, pending the conclusion of further talks with stakeholders, potential lenders, and investors. initial governance setting.
The hope is that, as an independent entity, UTNO can contribute to bring the ambitions of the founders into the wider sector. "It's not meant to be something that TradeIX or R3 want to do," says DiCaprio. "Much of what we have done in the last year has really worked with all the different members to understand how the governance structure should be."
The sources close to the project tell GTR that the UTN is also considering an option to entrust the management of the organization to a third party. The International Chamber of Commerce is presumably a candidate.
Much of the work of the steering committee has also involved discussion with regulators to find an ideal place for the new entity to be hosted.
"Our discussions with regulators were really around where the right place would be for this entity, which regulators are operating in this space," says DiCaprio di R3. "In particular with the commercial standards, you see that some countries stand out to support the different fintech and blockchain environments".
While DiCaprio could not reveal the position chosen by the committee, another source involved tells GTR that the commission has agreed Singapore as the legal jurisdiction for the new entity.
The state of the city has recently been a point of reference for the development of fintech and blockchain, including initiatives such as the Global Trade Connectivity Network (GTCN), a project co-managed by the Monetary Authority of Singapore for launch a blockchain-based trading platform.
What does the market say?
According to DiCaprio, UTN has received "very positive" reactions from the market. So far, the network has not made public announcements, but participants have spoken of the initiative more informally at conferences and industry events.
"There was a lot of interest," says DiCaprio. "In general, everyone" has "the problem".
Talking about GTRChris Sunderman, leadchain of the blockchain initiative for ING's commercial finance services, emphasizes the importance of such a project for banks, especially since many of them are members of more than one consortium. ING itself is involved in projects such as Marco Polo, Voltron and komgo.
"What you see is that banks that are active in a consortium are often active in other consortia," he says. "And of course at the end of the day they will see what the results of these consortia are, but they will also see that if you want to make your consortium successful, you need to connect to interoperability outside of the banks but also within a bank is of fundamental importance ".