Blockchain

and the innovation in global trade

TRF, BCR, October 13, 2017

Today, trade finance operates in a high cost, high maintenance old world model involving multiple parties
and an overreliance on human intervention that requires antiquated, disconnected, paper-based systems
for the facilitation of the movement of goods, money and credit in global trade.

Existing IT and financial systems are straining under the weight of an increasingly global economy.
Siloed, antiquated, and opaque - many of these systems have not improved materially for decades. They
introduce bottlenecks in the flow of trade, injecting unnecessary cost, time, complexity, and risk into
almost every step in any given trade transaction. This has made global trade extremely complex, risky,
inefficient and exclusive and resulted in unnecessarily layers of complexity, increasing the risks of failure
and potential fraud. Advances in technology such as the development of blockchain has created an
opportunity to truly innovate across multiple key sectors. Its effect on trade finance is revolutionary as it
addresses the many issues that can be seen today due to antiquated technology and the ineffective
methods of sharing and storing data.

Blockchain is a type of distributed ledger or decentralized database that keeps records of digital
transactions. Rather than having a central administrator like a traditional database, a distributed ledger
has a network of replicated databases, synchronized via the internet and visible to anyone within the
network. Blockchain is based on highly secured uses cryptography that makes the decentralized
database and the access to the data extremely secured.

Blockchain can be used to provide the key services that are important for any financial system. It creates
a decentralized, viable record of transactions, which allows the substitution of a single master database
for large numbers of proprietary ones. Therefore, blockchain technology can lead to simplification and
cost reduction in the trade ecosystem, making for trade finance transactions more secure, reliable and
efficient. In addition, blockchain provides far better means of establishing and using identity, which can
be associated with any number of verified credentials, while protecting privacy. For instance, by
providing unique, non-forgeable identities for things as well, along with the record of their ownership,
blockchain can simplify the transfer of physical assets and increase confidence in their provenance. This
could lead to many new financing solutions based on the move of physical goods.

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Founded a year ago - TradeIX is a company that is innovating by creating the network of networks in
global trade. The platform is powered by distributed ledger technology and is creating the worlds first
shared and open infrastructure for global trade. TradeIX has launched with enterprise software firm R3
and over a dozen international banks a strategic initiative to develop this open account trade finance
platform. Through this platform, financial institutions such as Barclays, BBVA, BNP Paribas,
Commerzbank, ING, Intesa Sanpaolo, Royal Bank of Scotland and Wells Fargo can automate pre- and
post-shipment financing and risk mitigation for corporate buyers and sellers around the world. This helps
simplify trade, improve visibility into trade flows and simplify access to credit and risk mitigation services
throughout the trade lifecycle.

Also -TradeIX together with AIG and Standard Chartered have successfully went live with the first
blockchain-enabled trade finance transaction for a global logistics company with financing provided by
Standard Chartered. This invoice finance transaction took place at the end of September and enabled the
logistics company to help its customers extend payment terms whilst maintaining the companys
receivables at current terms. The financing is offered by Standard Chartered and credit risk mitigation is
provided by AIG.AIG, by partnering with TradeIX and our clients, hope to differentiate their solutions by
being driven by corporate and bank client needs rather than being driven by the technology itself, so
their blockchain innovations are intrinsically optimising real trade finance and insurance requirements to
drive scale and efficiency, said Marilyn Blattner-Hoyle, Head of Supply Chain and Trade Finance AIG
Europe Limited. Blockchain is capable of changing the landscape of global trade. Companies such as
TradeIX are leading the way in innovating and implementing this new technology and creating the next
steps in the evolution of global trade.

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