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The Dutch banking group ING is preparing for one year other blockchain-based initiatives in 2019 to expand commodity trading and finance programs in various sectors, including energy, crude oil, soybeans, metals and mines.
ING, which since 2017 has been experimenting with digital ledger technology on its Easy Trading Connect (ETC) platform, says that blockchain innovations and their growing networks are outperforming centralized models.
Highlights the Komgo and Vakt powerhouse programs.
Distributed Ledger Technologies (#DLT) are destroying the #financial industry and make processes more efficient and safer. Let's take a brief moment to look back at the ING 2018 results in this area. #blockchain #innovation #fintech pic.twitter.com/vT30euwVZN
– ING (@ING_news) December 27, 2018
While a lot of eyes in the blockchain and in the cryptosphere have monitored the updates of Bakkt, the cryptocurrency trading platform arriving from Intercontinental Exchange – the parent company of the New York Stock Exchange – ING is betting on Vakt.
A blockchain-based digital ecosystem for post-trade physical processing, Vakt is on the verge of shaking raw materials in 2019, transforming the commercial life cycle and streamlining transactions.
Launched by a consortium of nine energy majors, traders and independent banks, Vakt is based on Quorum, the version of Ethereum focused on the company of JPMorgan is designed to eliminate duplicates of data and paper contracts. The strategic alliances with Deloitte and the software company ThoughtWorks complete its support base.
By the end of the year, the platform will be connected to Komgo to finance commodity trading, allowing banks to offer blockchain-based financing solutions to Vakt users.
Privately launched with BP, Mercuria, Equinor, Shell and Gunvor as its first users, Vakt plans to open up to the broader market in January and will be connected to Komgo by the end of the year, allowing banks to offer financing solutions based on blockchain to Vakt users.
According to the company's announcement,
"Although the initial launch is limited to specific trade in BFOET crude oil contracts, VAKT's ambition is to extend the platform to all physically traded energy assets, and the company is building its roadmap in response to the needs of the sector, but has US oil pipelines and barges of refined northern European products scheduled for launch at the start of 2019. "
Andrew Smith, executive vice president of trade and supply at Shell International Trading and Shipping Company Limited, states:
"Digitization is changing the way in which the energy value chain works – it's an exciting time.The collaboration with our colleagues and some of the major players in the industry is the best way to combine market skills and achieve the scale needed to start a digital transaction platform that could transform the way we all do business – ultimately, the goal is to improve speed and security, which benefits everyone along the supply chain, from operators market to customers. "
In addition to supporting Vakt, ING is expanding its other blockchain initiatives focused on commodity trading.
In an interview with Fastmarkets, Arnoud Star Busmann, director of ING's program for commodity trading and finance, blockchain innovation, said that a first Mercury-powered mercury pilot will send African crude oil to a buyer in China using ING's commercial financing, led to a collaboration with other heavyweight leaders in the energy sector: BP, Shell and Equinor (former Statoil).
They set up an Ethereum-based blockchain for real-time regulation of physical energy transactions. The decentralized network, which has drastically reduced the increase in efficiency both on the banking and commercial side of the transaction, includes the trading houses Gunvor, Koch Supply & Trading and Mercuria, together with the banks ABN Amro and Société Générale.
According to the report,
"The experiment showed that the average time for a bank to complete its role in a transaction has gone from about three hours to just 25 minutes, and for traders, efficiency has increased by a third, with ratings of the user experience much higher than expected, said Star Busmann.As the prototype uses blockchain technology and is designed for business without paper, the risks in the whole process have been reduced. "
The platform has become a project for other raw materials, with ING hiring global merchant giant Louis Dreyfus in 2018 to test agriculture. A pilot test has moved soy from the United States to China, with the Société Générale and ING banks.
Star Busmann says,
"The time taken to process documents and data has been reduced five times, from hours to minutes."
"We have developed a fairly advanced prototype in which a soybean transaction can be completely digitized, including all the data, all the documents but also the actors that are part of it, from the commercial process, to financing and regulatory aspects".
"Louis Dreyfus compared the digital flow with the flow of paper and led to an improvement in the efficiency of the factor five in their operations, so it was significant and very stimulating for the company. in terms of efficiency for all the participants in the chain. "
"The success of the platform demonstrates the immense potential of generalized accounting technologies to promote commodity trading and financing, so I'm sure there will be a follow-up."
Komgo SA, a larger commercial finance consortium that aims to develop a decentralized platform based on Ethereum, includes 15 of the world's largest institutions, including ING, Citi and Rabobank international banks, along with commercial companies and oil giants such as Shell . Established in September, the international market for bulk products uses blockchain to pass administrative bottlenecks and a swamp of bureaucratic paperwork to digitize commercial funding.
Following for ING: an exploration of the supply chain traceability for metals and mines.
Says Busmann,
"The ability to prove the origin of the goods and the responsible sourcing elements becomes very critical." Since there is a big sore point, you can conclude that we should also look at this. "
"There's a huge opportunity to use the blockchain to get more control over inventory movements, and I'm aware of some initiatives in that field in the metals and broader products sector."
ING, Komgo and Vakt are members of the Enterprise Ethereum Alliance (EEA).
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