Siemens and Standard Charter to Put Blockchain-based Bank Guarantees for Trade Finance

Standard Charter And Siemens Partner To Start Blockchain-Based Bank Guarantees In UAE

Standard Chartered and Siemens Financial Services are starting what they call “an industry-first client pilot” for blockchain-based smart guarantees in trade finance.

According to a report from IBS Intelligence, the goal– that also includes assistance from digital ledger firm TradeIX – is aimed to move the process on from the traditional paper-intensive process and fully digitize bank guarantee issuance from end to end using automated smart contracts.

Built on R3’s Corda framework, the explication will enable Siemens to digitize and automate its guarantee process – a traditionally paper-intensive business – for customers with large transaction volumes, from initiation of the bank guarantee to the claim handling. It utilizes a decentralized ledger and auto-executing smart contracts to provides a streamlined communication tool between the guarantee issuer (in this case Siemens), the bank (Standard Chartered), and the beneficiary (Siemens’ customers). The pilot is expected to be fully completed later this year.

Motasim Iqbal, Head, Transaction Banking UAE, Standard Chartered, said:

“This is an industry-defining solution which we believe will transform the way guarantees are issued and processed in the UAE. Siemens Financial Services has been a key partner for us to build and develop this pilot on the distributed ledger and we believe that this technology can further be harnessed by the Dubai Smart City initiative.”

According to Standard Chartered, a commercial bank guarantee is easier to digitize than a letter of credit that involves multiple parties and reams of documents. The bank said the blockchain pilot will permit Siemens to digitize its guarantee means for customers with large transaction volumes — in the future covering insurance, amendments, and claims and eliminating the inefficiencies that are present today.

If the pilot proves successful, it will allow firms like Siemens to bring new efficiencies for large clients, digitizing guarantee issuance, amendments, and claims. Michael Bueker, Siemens' chief financial officer, predicted that integrating the blockchain trade finance solution into the firm's daily operations would “streamline our processes and make our trade finance operations smoother, faster and more efficient.”

This is not the first instance when Standard Chartered had shown interest in the blockchain space. As far back as 2015, the bank was touting the potential of the tech in trade finance. Subsequently, they have embarked on various trials and development partnerships, most recently acting as banking partner for a blockchain-based remittance service launched by Ant Financial, the payment affiliate of Chinese e-commerce giant Alibaba.

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