Blockchain trade finance initiative Contour went live today. The shareholders of the platform hope that it will be able to bring innovation in the trade finance sector.
An initiative by top lenders
Contour is a trade finance platform owned by the eight banking behemoths- Standard Chartered, CTBC, HSBC, Citi, BNP Paribas, Bangkok Bank, ING, and SEB. The platform was previously available in the beta phase. It was previously known as a Letter of Credit (LoC) or Voltron blockchain and designed to provide a distributed ledger network technology for global trade finance solutions.
As the blockchain moves out of beta, it opens new doors of opportunity in the trade finance sector. GT Review (GTR) suggests that the race to bring innovation in this sector has led to many fragmented platforms. Experts are concerned that none of these platforms may be able to reach the critical mass necessary to help it becomes a functional and transformative technology for the industry.
Adoption is critical for the blockchain
For any trade finance platform to work, gaining widespread adoption would be the key. Vinay Mendonca, the global head of product, propositions, and structuring, trade, and receivables finance at HSBC said,
“I am struggling to think of another platform that has got so many banks onboard across different corridors and clients that have already undertaken live transactions and seen the value from it.”
He added that there is a necessary foundation that could help the solution reach scale. HSBC is also looking forward to moving its entire documentary credit clients to the Contour network. It is also asking its financial institution clients to join the platform, especially those based in large markets like India, Bangladesh, and Vietnam.
The prototype application was launched in 2017 on R3’s Corda. It then underwent testing by 80 corporates and banks and held trials in 17 countries. In the beginning of this year, it became a standalone legal entity. Contour CEO Carl Wegner said that the testing phase was crucial in moving the blockchain out of the beta phase. The review and inputs received during testing helped them in launching it formally.