About
KBC's Digital Trade Chain enables secure international trade between SMEs, by providing a shared market platform, to manage, track and protect trade transactions, in a simple, digitized way.
Innovation presentation
The Digital Trade Chain (DTC) is a blockchain solution that facilitates secure international trade, focused on SMEs. Many SMEs depend on import and export to grow their businesses. Most of this international trade is done based on open account ( without any risk migitation or bank involved). The paper based documentary credit as a way of reducing the risks involved in doing business, is not always suitable for SMEs as it is a more complex process.
KBC's new Digital Trade Chain application is a digital platform for managing, tracking and protecting domestic and international trade transactions. Using the application simplifies trade finance for SMEs. The DTC links parties, i.e. buyer, seller, and the banks of both trade parties to each other. The application provides follow up for the entire trade process from order to payment, displaying it in an at-a-glance flowchart and guaranteeing payment when all contractual agreements have been met.
All trade events are registered by the parties on the blockchain and the final payment by the buyer against receipt of goods (the ultimate goal of each trade) will automatically be processed by the execution of a smart contract. The payment reconciliation will be facilitated, improving the whole process. The platform is fully automated and available 24/7, so the order-to-payment process is much faster than the traditional exchange of documents. It also requires far less back-office administration.
Uniqueness of the project
Today every bank:
• pushes its own front office solution to their clients leaving the corporate behind with multiple bank applications to manage,
• settles the transaction in its own back office application,
• exchanges official paper documents through a courier service (DHL, UPS or others),
• etc…
This slows down the process heavily leading to longer days sales / payables outstanding and thus worsening the working capital of both trade parties.
Uniqueness
One shared and secure platform used by all involved parties in the trade chain is disruptive.
The Digital Trade Chain facilitates international trade growth as it provides a very attractive alternative to letters of credits and open account transactions.
The Digital Trade Chain gives banks access to new market opportunities that were not available before (open account transactions) and the possibility to offer additional services to SMEs like trade data services, payment confirmation, …
The Digital Trade Chain also provides counterparty information to buyer and seller: scoring of trade parties, business reports, credit limits,
Moreover, this solution attracts customers (SMEs as well as large corporates) who are using letters of credit today, leading to some cannibalization. But if we don’t cannibalize/disrupt our business today, someone else will do it tomorrow…
Shouldn’t we finally disrupt a business that works already for more than 500 years in a similar (paper based) way? Wouldn’t it be awesome to make our dent in the trade finance universe?
