Commerzbank confirms first commercial transactions on Marco Polo network
Commerzbank, İşbank and LBBW have executed commercial transactions with German and Turkish corporate clients via the Marco Polo trade finance network using blockchain in a live environment.
This is cited as a key milestone in the run-up to the market launch of the Marco Polo Payment Commitment.
The purpose of the transactions was to establish an irrevocable payment commitment to the supplier, issued by the buyer’s bank.
The data required to establish the commitments was exchanged in a digital format via the trade finance network, using R3’s Corda blockchain technology.
The first cross-border transaction took place on 10 May, in cooperation with İşbank, between corporates Kuraray Europe and Şişecam.
The underlying commercial transaction involved the export of laminated special glass interlayers from Germany to Turkey. The payment by open account has been replaced by an irrevocable payment undertaking with digital exchange and matching of trade data.
The second transaction – the ‘go-live’ in Commerzbank’s home German market – followed on 20 May, in cooperation with LBBW and between KSB and Voith.
The underlying transaction was the purchase of special couplings. The data transfers required to secure payments between the pump and valve manufacturer KSB and the technology group Voith, as well as the credit institutions involved, were again performed in a secure and closed area with access only permitted to the parties involved in the transaction.
A Marco Polo Payment Commitment is an irrevocable, abstract undertaking by the buyer’s bank to the supplier to make payment on the due date.
The payment commitment is based on the exchange and successful automatic matching of digital trade data in the blockchain network, thus providing financing options.
Nikolaus Giesbert, divisional board member transaction banking at Commerzbank, says: “Our clients are looking for innovative supply chain management solutions.
“Commerzbank is focusing on speed and transparency in this area, where blockchain applications have tremendous potential. This transaction is a major step towards market launch.”
Dr Matthias Schmitz, managing director responsible for finance and procurement at KSB, adds: “After digitalising our production and products wherever possible, we are now systematically approaching digitalisation of our processes.
“The Marco Polo platform, and technologies such as blockchain and distributed ledger, are allowing us to raise our trading processes to a new, paper-free, and – most importantly – secure level.” KSB carried out a pilot transaction in 2020, ahead of this first live transaction.
“Live payment commitment transactions involving KSB, Kuraray, Şişecam and Voith, and Marco Polo member banks Commerzbank, İşbank and LBBW are proof that digital end-to-end settlement processes with a high degree of automation and an electronic data exchange are possible, and will become a reality in trade finance,” says Daniel Cotti, managing director at TradeIX, which operates the network.