Singapore demonstrates world’s first application of distributed ledger technology in trade finance

Published 
  • Proof of concept sets stage to lower risks in trade finance

Singapore – Standard Chartered Bank, DBS Bank and Infocomm Development Authority of Singapore (IDA) have successfully completed a proof of concept (PoC) delivering the world’s first application of distributed ledger technology to enhance the overall security of trade finance invoicing. Leveraging distributed ledger technology, the initiative will reduce risk around duplicate invoice financing for banks while preserving client confidentiality.

Gautam Jain, Global Head, Digitisation and Client Access, Transaction Banking, Standard Chartered, said, “This success lays the foundation for harnessing technology to achieve greater goals in the banking industry. As the world’s leading trade finance Bank, we continue to innovate and develop solutions to solve real world issues and more importantly contribute to the overall digitisation of trade and trade finance. We will continue to look at ways to collaborate and contribute to the overall growth of the industry.”

The PoC marks an important milestone in the digitisation journey of trade finance and the revival of global trade. With enhanced security brought into the overall process, it reduces the systemic capital risks arising from duplicate invoices between lenders in a market. This creates a more conducive trading environment which in turn should encourage more trading activities using invoice financing.

Lum Yin Fong, Global Head, Client Management and Implementation, Global Transaction Services, DBS Bank, said, “DBS is committed to innovating and shaping the future of banking to make banking easier and more seamless for our customers. This cuts across our different businesses and this proof of concept is another important milestone for the franchise. Trade finance is traditionally a paper-intensive process but with the use of distributed ledger technology, we can now digitise and authenticate records. This could revolutionise and transform trade operations, enhancing risk mitigation and creating more efficient processes for both corporates and banks.”

The initiative allows banks to convert invoices into digital assets on a distributed ledger. This gives the participants the ability to access a single source of information for the status of invoices seeking financing across all the participating banks while preserving client and commercial confidentiality. This is done by utilising distributed ledger technology as a means to prevent duplicate financing of the same invoice by different banks. Further, the initiative is envisaged to be an open ecosystem where neutral third parties can participate and verify the authenticity of the related trade documents being financed; further reducing the risk of financing duplicate invoices.

Khoong Hock Yun, Assistant Chief Executive, Development Group, IDA, said “As we build Singapore into a Smart Nation, we are also working closely with the financial sector to enable innovations that can help increase Singapore’s competitiveness as a global trading hub. It is essential for strong public-private sector partnerships to flourish to create a Smart Financial Centre with world class leading edge solutions that benefit our businesses.”

Jacqueline Loh, Deputy Managing Director, Development and International, FinTech and Innovation Group, MAS, said “Given Singapore’s role as a leading global trade finance and fintech centre, banks based here are well positioned to twin these two strengths to improve efficiency and strengthen risk management. This POC demonstrates the innovative spirit of Singapore’s Smart Financial Centre to leverage distributed ledger technology to support economic trade – which is the lifeblood of Asia’s economy.”

In the next phase of the project, the working team will be looking at widening the participation to include other industry stakeholders, including government agencies such as Singapore Customs and other banks based in Singapore, to join as partners and contribute to the commercial adoption of this initiative.

Most recent episodes

£15 Billion Stimulus Pumped into UK Economy to Ward Off Recession Fears

Welcome to the latest edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 7th June...

04:44

Advantage Treasury

Eleanor Hill is joined in the virtual TreasuryCast studio by Nicolas Cailly and Philippe Penichou (Societe Generale) to look at treasury trend predictions for the remainder of 2022, with a particular focus on virtual accounts. In this deep dive into current and future treasury priorities, our guests...

24:22

40th Annual New York Cash Exchange: What Can Treasurers Expect?

Ahead of the 40th annual New York Cash Exchange, two of TMANY's distinguished board members, David Miller and Timothy T. Hesler, CTP, provide TMI CEO, Robin Page, with a quickfire rundown of what attendees can expect from this year’s conference. Our guests share their aspirations for the event, explain...

09:58

Expectation-Beating Inflation Prints Ratchet Up Pressure on Monetary Policy

Welcome to the third edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 9th May...

04:48

Making the Sustainable Transition: A Roadmap to ESG in Treasury

Over the last 18 months, Societe Generale has experienced a steady increase in requests from their corporate clients to integrate ESG features in treasury management.  Louis-David Rouyer, Philippe Pougeard, and Emmanuelle Petelle (Societe Generale) provide TMI's Eleanor Hill with a whistlestop run...

22:24

Lift Off for Fed Rate Rises

Welcome to the latest edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 5th of...

04:58

Treasury in 2022 and Beyond

Industry experts Bob Stark (Kyriba) and Sebastian di Paola (PwC) join TMI's Editor, Eleanor Hill, to explore the very latest treasury trends - and to discuss how smart treasurers can get ahead of th...

43:21

How BearingPoint Harnessed Data-Driven Forecasting with CashAnalytics and SAP

Listen back to our recent forecasting masterclass, where Group Treasurer Eveline Stam, and Conor Deegan (CashAnalytics) provided TMI's Eleanor Hill with a comprehensive overview of how consultancy firm BearingPoint achieved company-wide cash forecasting nirvana by combining specialist solutions from...

37:14

The 3 T’s of The Future: Tech, Treasury, and Transformation

Over the past two years, an increasingly dynamic environment has not only accelerated technology development – from quantum computing to blockchain technology, and even the metaverse – but also technology adoption, bridging colleagues and breaking down silos in a remote work world. In this podcast,...

44:02

Monetary Policy Continues to Drive Markets as Ukraine Invasion Weighs on March Meetings

Welcome to the second edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 3rd of...

05:25