CGI, National Bank of Canada and Skuchain in blockchain-based trade finance pilot
National Bank of Canada, tech heavyweight CGI and blockchain tech firm Skuchain have collaborated on a pilot programme to improve and streamline the process for negotiating standby letters of credit (LCs) and guarantees.
LCs and guarantees – used across many industries to secure contracts – “are currently conducted via email, making them prone to errors and delays in a process that lacks transparency for beneficiaries regarding terms and approval status”, CGI explains.
For National Bank of Canada, CGI integrated the CGI Trade360 trade finance platform with Skuchain’s Contract Builder, an application built on the blockchain start-up’s Brackets platform for smart contracts on a blockchain.
The integration enables the bank to provide trade finance services digitally to customers conducting business on a blockchain business-to-business (B2B) solution. In particular, customers will be able to initiate, conduct and conclude negotiations of standby letters of credit and guarantees entirely on smart contracts that can intelligently construct agreements and securely communicate any changes in terms to relevant parties.
The result is a blockchain-based contract negotiation tool that is “enormously effective” in the standby LC and guarantee process, CGI says.
“This pilot project is a great opportunity to leverage blockchain technology to simplify the process for negotiating standby LCs and guarantees while making it more transparent and secure. This will enable us to offer a simple, fast and efficient experience to our commercial clients which facilitates managing their business,” comments Patrice Roy, VP of payments, cash management and international solutions at National Bank of Canada.
“This standby letter of credit contract builder is the first live implementation of the emerging DLPC standard,” adds Srinivasan Sriram, CEO of Skuchain. “This standard is the result of more than two years of work by the Distributed Ledger Payment Commitment (DLPC) Working Group at the Bankers Association for Finance and Trade (BAFT).”