Building a better bank: IBM's blockchain secures cross-border trade

Blockchain makes transactions visible and secure for SMEs

IBM is using its blockchain technology to build and host a new trade finance platform for seven European banks, including Deutsche Bank and Societe Generale.

A blockchain is a type of secure data store, where any change in the digital ledger is replicated and visible to all computers in the chain. To alter or delete something, a hacker would need to infiltrate every machine in the distributed network, and so the technology highly secure - making it very attractive to the financial sector.

The new platform will be based on IBM Blockchain powered by Hyperledger Fabric (an open-source blockchain framework). It will be designed to facilitate domestic and cross-border trade for SMEs in Europe - and, thanks to the blockchain, increase transaction transparency.

The consortium behind the move is known as Digital Trade Chain (DTC), and consists of Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit. IBM will run the platform - also called Digital Trade Chain - in its own cloud. It will connect all parties involved in a transaction, both online and through mobile devices.

The DTC consortium expects that, by addressing the financing gap of SMEs (according to the World Bank, half of SMEs do not have access to formal credit), it will open new revenue streams and help to nurture new trade relationships. The solution will provide accountability and transparency to cross-border transactions, which the group expects to increase SMEs' access to finance.

"In working with hundreds of clients around the world on a diverse range of blockchain projects, trade finance has emerged as one of the strongest use cases for the technology," said Marie Wieck, general manager of IBM Blockchain. "By addressing the SME market…the Digital Trade Chain Consortium is pioneering a unique blockchain solution with the potential for widespread impact."

IBM and the DTC consortium expect the Digital Trade Chain solution to enter production by the end of the year.