CBA, Wells Fargo and Brighann Cotton undertake first global trade transaction using blockchain
The Commonwealth Bank of Australia (CBA), Wells Fargo, and Brighann Cotton have pioneered the first global trade transaction between two independent banks by combining blockchain technology, smart contracts, and Internet of Things (IoT).
According to the official release, the blockchain trade transaction involved shipment of cotton from Texas, USA to Qingdao, China, by using the potentials of distributed ledger Skuchain’s Brackets system for all parties.
“Existing trade finance processes are ripe for disruption and this proof of concept demonstrates how companies around the world could benefit from these emerging technologies,” Michael Eidel, Executive General Manager of Commonwealth Bank’s Cash-flow and Transaction Services, said. “The interplay between blockchain, smart contracts and the Internet of Things is a significant development towards revolutionizing trade transactions that could deliver considerable benefits throughout the global supply chain.”
The trade took place in an open account transaction, reflecting a Letter of Credit and was executed between the seller – Brighann Cotton (US); the buyer – Brighann Cotton Marketing Australia; and their respective banks – Wells Fargo and Commonwealth Bank. The trade involved a supply chain trigger in order to confirm the geographic location of goods in transit before a notification is sent to allow for the release of payment.
“Wells Fargo is committed to exploring emergent technologies and innovative concepts that benefit our customers. In this case, we demonstrated how a new approach to trade could benefit a joint Wells Fargo and Commonwealth Bank customer, Brighann Cotton. This marks another step in evaluating technology that, over time, could support the evolution of trade finance,” Chris Lewis, Head of International Trade Services for Wells Fargo, said.
The advantages of this blockchain, smart contracts, and IoT trade transactions include transparency, cost-efficiency, customizable, convenience and security, among others. Blockchain creates transparency between buyer and seller and has the ability to track the shipment in real-time.
With the successful trade transaction, CBA and Wells Fargo are aiming to collaborate with trade finance clients, financial institutions, fintech companies and consortiums like R3, in order to ensure their client benefits from the changes in technology across global trade ecosystem.
According to the official release, the blockchain trade transaction involved shipment of cotton from Texas, USA to Qingdao, China, by using the potentials of distributed ledger Skuchain’s Brackets system for all parties.
“Existing trade finance processes are ripe for disruption and this proof of concept demonstrates how companies around the world could benefit from these emerging technologies,” Michael Eidel, Executive General Manager of Commonwealth Bank’s Cash-flow and Transaction Services, said. “The interplay between blockchain, smart contracts and the Internet of Things is a significant development towards revolutionizing trade transactions that could deliver considerable benefits throughout the global supply chain.”
The trade took place in an open account transaction, reflecting a Letter of Credit and was executed between the seller – Brighann Cotton (US); the buyer – Brighann Cotton Marketing Australia; and their respective banks – Wells Fargo and Commonwealth Bank. The trade involved a supply chain trigger in order to confirm the geographic location of goods in transit before a notification is sent to allow for the release of payment.
“Wells Fargo is committed to exploring emergent technologies and innovative concepts that benefit our customers. In this case, we demonstrated how a new approach to trade could benefit a joint Wells Fargo and Commonwealth Bank customer, Brighann Cotton. This marks another step in evaluating technology that, over time, could support the evolution of trade finance,” Chris Lewis, Head of International Trade Services for Wells Fargo, said.
The advantages of this blockchain, smart contracts, and IoT trade transactions include transparency, cost-efficiency, customizable, convenience and security, among others. Blockchain creates transparency between buyer and seller and has the ability to track the shipment in real-time.
With the successful trade transaction, CBA and Wells Fargo are aiming to collaborate with trade finance clients, financial institutions, fintech companies and consortiums like R3, in order to ensure their client benefits from the changes in technology across global trade ecosystem.
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