A group of operators and leading banks in the energy sector is trying to shake up the secular commercial finance industry with the launch of two new platforms supported by blockchain technology.
Energy groups including Royal Dutch Shell, Mercuria and Gunvor and financial institutions such as ING, Société Générale, Citigroup and ABN Amro are supporting two new blockchain platforms.
Digitizing the large number of contracts, letters of credit, invoices and other documents currently sent worldwide via e-mail, fax or post and placing them on the Ethereum blockchain platform, they hope the new platforms will lead to faster methods , cheaper and safer to complete a transaction in addition to settling the transaction.
"Blockchain technology will respond to the needs of key players in commodity trading by improving efficiency and safety," said Komule CEO Souleima Baddi, who will focus on financing the commodity trade by digitizing identification documents of creditors and electronic letters of credit.
Komgo will be launched in November together with VAKT, which will focus on the transaction of raw materials, putting the information and documents necessary for an agreement to be developed on the platform. The two blockchain platforms share seven common shareholders and will work in tandem so that users can complete a transaction on the physical material side and on the financing of the transaction.
From the archives
Blockchain is an electronic information system that provides cryptocurrency support by recording offers and related information in digital blocks.
Encrypted digital information, stored in linear and chronological order, can be shared and confirmed by those with permissions. The records can not be reviewed and any attempt to change is visible to all participants.
Trade and finance of raw materials, on the contrary, is a secular sector that still depends on the exchange of physical documents. This can lead to delays, high costs and even a greater risk of fraud.
In an effort to enter the digital age, banks, large commodity traders and their lenders have experimented using blockchain agreements, using technology to process documents.
One of these experiments saw document processing times reduced to one-fifth of the average, while another oil trade led to cost savings of 25-30%, according to participating banks.