Original article on Euromoney.com. published on 28th Dec 2018.
Here is a short excerpt and we are quote:
“But some developments have nothing to do with the bank consortia.
For example, DBS – which is, in most respects, a tech leader – does not appear in these big assemblies. The DBS approach has not been characterized by joining consortia of other banks, but by producing integrated solutions for individual clients, by harnessing DBS’s technological capabilities to address their particular needs.
The potential is very big for Asia to drive technological innovation – Olivier Guillaumond, ING CRaof Latiff, group head of digital and GTS product management at DBS, says the best way for the bank to be relevant in the supply chain and add value is “to build APIs [application programming interfaces] which know how to study the nodes in the blockchain, and extract the information you need in order to be able to do what you need to do. You pull data related to invoices, dates, transactions, counterparties, and digitize the supply chain process.”
Latiff continues: “There are lots of instances where the bank is in the consortium but the end-customer only gets limited incremental value. That’s not what we wanted to do.” He argues that the better way to be differentiated is to use internal tech infrastructure to develop solutions for specific client needs, “to help our clients’ businesses achieve their objectives not just for today, but for a long time to come.”
For example, DBS announced on December 1 that it had enabled an end-to-end cross-border blockchain trade platform for a commodity supply chain network, made up of farmers, exporters, traders and end customers, but not any other banks.
DBS put this together with Agrocorp International, the global agri-commodity trading company, and with Distributed Ledger Technologies, a blockchain provider.
Among other things, it offers participants in the supply chain real-time updates on commodity prices and delivery information, as well as trade financing approval for orders coming in.
DBS says it cuts Agrocorp’s average working capital cycle by about 20 days.
At the start, the solution focuses on Australia, where about 4,500 farmers in the Agrocorp network will be connected to end-customers such as supermarkets and restaurants. Using it, customers can get access to real-time pricing and supply information, and can carry out live transactions, tracking delivery of orders. On the payment side, once a trigger event is reached – such as confirmation that goods have been shipped – the blockchain platform triggers instructions to DBS to request financing for Agrocorp, or to release payment to the farmer. There is little manual intervention, making it faster.
What problems does this solve for Agrocorp?
“There’s a few challenges,” says Vishal Vijay, head of business development at Agrocorp.
“Firstly, we’re relying on an antiquated system that was developed a few hundred years ago by the Dutch trading houses: a system of bills of lading and letters of credit, all paper documents.”
Digitizing that process brings not only convenience but “security to all the given participants in a supply chain, from the farmers to the processors to the shippers to the end-customers, that the goods are being transacted and the payments are being made.”
Second, Vijay says, is traceability. “More and more in this environment, our customers want to know exactly where their product is coming from,” he says. “They want to be able to trace it all the way back to the farm. That’s something we are solving with this.” So it enables sustainable practices, and the monitoring of that sustainability. And the third is time – which begets business. “Paper documents take time to be generated, as well as to be sent across from one part of the world to another, and time is money,” Vijay says. Generating documents in real time and enacting payments faster mean a reduction in the working capital cycle of five to 10 days. That translates into more business, as well as interest savings.
The plan is for Agrocorp to broaden its blockchain platform from Australia to other key origination markets including Canada, Myanmar, Ivory Coast and Ukraine. The range of commodities traded on it will grow too, from pulses such as mung beans and chickpeas, to cereals, cotton, edible nuts and oilseeds.”
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