Compelling results for blockchain oil-trade test ING and Société Générale
On 22 February, ING and Société Générale Corporate & Investment Banking presented blockchain prototype testing results coinciding with IP Week in London together with trading house Mercuria.
Both banks presented the results of the Easy Trading Connect blockchain prototype after successfully using the new technology to carry out a live oil trade between parties with Mercuria, a global commodity trading group. The test proved that there were significant speed, cost and risk benefits to be achieved.
The platform, called Easy Trading Connect, is designed for paperless trading and aims to digitalise and standardise commodity transactions in order to increase speed and efficiencies in the trade process. The prototype was used in a real trade to validate expectations. The experiment involved an oil cargo shipment containing African crude which was sold three times on its way to China, and included traders, banks as well as an agent and an inspector, all performing their role in the transaction directly on the platform.
The challenge at the core of this project is the need for technological advancements in commodity trading and finance, an age-old sector that is still very much based on the exchange of physical paper documents travelling around the world. This is a source of high cost, delays, and risks, making it a market with high inefficiencies, ripe for transformation. The results of the experiment demonstrated that the platform can greatly improve the efficiency of certain processes, bringing the average total time for a bank to complete their role in the transaction down from approximately three hours to 25 minutes.
Easy Trading Connect is the first comprehensive platform prototype to be developed which can be expanded and scaled across the commodity and finance domain and uses blockchain technology to overcome some of the industry’s biggest challenges. Applying distributed ledger technology to the commodity trade financing chain can prevent issues such as documentary fraud and allows for the digitalisation of assets. The platform also boosts operational efficiency and quality by introducing auto-checking of documents.
This video (01:29) shows how the ETC platform works.
Patrick Arnaud, managing director Trade & Commodity Finance at ING, commented: “The commodity finance industry is hampered by nature by inefficiencies and outdated procedures. By applying blockchain technology, we expect that we can eliminate a lot of these, making the overall process faster and more cost effective and the tests we have been able to carry out have proved this. The Easy Trading Connect platform helped to digitalise and standardise the transaction process from start to finish.”
Federico Turegano, global head of Natural Resources and Infrastructure at Société Générale Corporate & Investment Banking, added: “The Easy Trading Connect platform allowed real-time access to information for all parties, eliminating the need for an acknowledgment process. It also keeps a full data record, which is useful for auditing and as well as having an intuitive navigation system and a well thought through design.”
Alistair Cross, global head of Operations at Mercuria, stated: “We are very pleased with the success of this initial test. The blockchain technology allows for access to real-time data and key details of the transaction all in one ecosystem, creating an improved and more flexible user experience.”
Renée Schnitzler, ING, tel. +31 20 576 6371