- The DBS and Contour partnership will enable customers to transfer letters of credit in real-time.
- The bank aims to use the blockchain technology to reduce time and paperwork for its clients.
- Joining Contour’s portfolio of banks will aid DBS’ ongoing efforts to drive efficient processes in trade.
The global pandemic Coronavirus has caused economies to plunge, sparking fears of a possible recession. As a result, the times they are a changin. Combating the current turbulence, one of the industries to witness growth is undoubtedly fintech. An increasing number of traditional banks and financial institutions are implementing digital solutions and partnering with blockchain platforms to stay relevant.
Lately, it was Singapore-based DBS Bank which joined Contour’s trade finance network, which is built over R3’s Corda.
The partnership, “will be able to showcase the full potential that a blockchain solution can offer to trade finance,” Carl Wegner, CEO, Contour said as reported by The Business Times of Singapore.
Founded by financial giants in the likes of BNP Paribas, Bangkok Bank, ING, HSBC, Standard Chartered and Citi Ventures, Contour digitalizes global trade processes such as the creation, exchange, approval and issuance of letters of credit (LC) and is due to have a full launch this year.
Going from the conventional methods to modern tech
Having become the first bank from Singapore to join the network, DBS aims to simplify trade for its corporate customers.
This collaboration will enable DBS to tap into Contour’s digital solutions therefore providing a complete digital end-to-end LC settlement process including the “transfer of electronic trade and title documents.” Inevitably for customers it will mean shorter wait time for the settlement, reduced paperwork and smoother trade.
Apart from transferring important documents, the blockchain solution will help pre-issuance of negotiations between applicant and beneficiaries in real time.
This process would involve more transparency and therefore an increased accuracy of the issued LCs issued.
“And, in the event of discrepancies, [it will] facilitate quicker resolution,” DBS said.
Additionally, to further boost trust and transparency between the two parties there will be real-time tracking of transactions on the platform along with a full audit trail.
Commenting on the importance of embracing technology, Wegner added that:
“Efficiency in the LC issuance process is a vital part of upgrading the industry. Through our network, we can enable banks and corporates to leverage the shared transparency in the platform and manage information digitally which is even more important than ever for the trade finance industry.”
Escalating demand for contactless transactions
With the ongoing Covid-19-induced global lockdown, it is now more essential than ever to prepare for a post-pandemic world which will be powered by a contactless form of trade.
While in a traditional trade finance firm, most procedures require human involvement and heaps of paperwork, digitalizing trade processes is the only way for fintech firms to stay ahead of the curve.
Sharinf the same sentiment as Wegner, group head of global transaction services at DBS Bank, John Laurens, said:
“This is more than simply digitising an historically paper-based service; it’s about transforming the way industries work by providing greater transparency, security and speed to build sustainable trade ecosystems that are able to weather the peaks and troughs of economic cycles and are resilient in times of crisis.”