Voltron, a Blockchain-Based Trade Finance Platform, Edges Closer to Real-World Use


The Voltron initiative, a trade finance platform built on R3's Corda blockchain, is set to begin operating in 2019. That's according to Bain & Company, which is working with eight banks and other partners to pioneer a new, blockchain-based solution for managing letters of credit in the context of global trade.

The initiative now known as Voltron first made headlines back in May 2018, when the banks HSBC and ING announced that they had used Corda to execute a trade finance transaction. The deal facilitated the shipment of soybeans between different subsidiaries in the global supply-chain network of Cargill, the trading corporation.

The partnership that made the trade possible was not known as Voltron at the time, but that is what Bain is now calling it in an announcement that said the solution is "targeting production" for 2019. We assume this means that the platform will be ready for large-scale, real-world use at some point in 2019.

Moving Closer to the Real World

Plenty has been written about how blockchain technology can improve trade finance - the process of providing credit for companies that exchange goods across borders. That is because there is much for blockchains to disrupt in this industry, which is rife with siloed operations, poor visibility and communication between different stakeholders, and a paucity of trust for companies and banks that are operating across international borders.

Traditionally, issuing credit has required banks to work individually with different companies as they buy and sell goods. Shipments are frequently delayed as companies wait for credit to be confirmed and reconfirmed. Payments might also arrive late.

Blockchain technology can theoretically resolve all of these issues by providing a single, immutable ledger that all stakeholders can use to record issuance of credit and trade transactions as goods move across the globe. In this way, distributed ledgers would help to automate much of the trade finance process, improve visibility and avoid delays.

To date, several companies or consortiums have announced efforts to use blockchains or distributed ledgers to improve trade finance. The initiative announced by IBM and Maersk in 2017 is probably the best-known example. Others include a proof-of-concept demonstration by Japanese companies, and TradeIX's Marco Polo Network , which launched in early 2018 (and which, like Voltron, also uses the Corda blockchain).

These and similar initiatives show that banks and international trading corporations are keenly interested in using distributed ledgers to improve trade finance. They've also demonstrated that the technology actually works. However, so far, these efforts have not yet moved beyond the proof-of-concept stage.

That's why Bain's promise that Voltron will be ready for primetime in 2019 is notable.

Stay Tuned

Of course, even more notable would be confirmation that the Voltron trade finance platform is actually being used. For now, we'll have to keep holding our breath for such an announcement. Although Bain said that Voltron is "continuing to extend its corporate customer programme to undertake more live transactions and is in active discussions with a number of corporates," it remained tight-lipped about who those potential customers are or when in 2019 the platform might enter into general-purpose use.

Still, even in the absence of specific details or absolute confirmation about Voltron's impending availability, the platform does at least appear to be crossing the line between proof of concept and reality, if Bain is to be believed. Given the slowness of similar trade finance initiatives to do the same thing, that's significant. We'll continue following Voltron to see if, at some point in 2019, it proves to be the world's first blockchain-based trade finance solution to achieve large-scale adoption.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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