Blockchain, a revolution in international trade finance
Blockchain technology is transforming processes in companies and financial institutions that can now offer greater security and privacy. The integration of this type of technology poses a revolution in international trade financing that will allow for more agile exports and immediate payments.
This type of technology -which records transactions in blocks and forms permanent data chains- could intensify the benefits of international trade, according to the World Economic Forum. In particular, in the traditional process of verifying and sending documents.
Generally, financial transactions in international trade depend heavily on billions of paper documents. But blockchain technology, linked to smart contracts, will reduce bureaucracy, paperwork, and time to complete an operation.
Trade finance is one of the main approaches to the application of blockchain technology, due to how it is involved within the processes of a supply chain. With the application of this type of technology, banks will guarantee commercial financing transactions with more transparent, secure, and efficient processes.
Currently, financial services organizations are exploring how blockchain could be applied to trade, as well as other key processes.
An analysis of the technology firm IBM, highlights the changes that will represent the integration of blockchain in international trade:
1. Increased transaction volume. With the traditional system, most of the processes are limited by the number of operations.
2. Increased security. The way this technology works - through encrypted blocks distributed in thousands of computers - guarantees the security of the information.
3. Human errors will decrease. Although blockchain technology still needs further research and development, it has been proven to be effective in different business operations performed.
The adoption of blockchain in the financial industry will generate significant benefits for all market participants, considers Thomas Olsen, the global partner of the consulting firm Bain & Company. In particular, in commercial financing transactions since it will reduce the risks of fraud or duplication of processes through better control and greater transparency in transactions.