Contour has announced a transaction on its blockchain network between Rio Tinto and Guangxi Shenglong Metallurgical. This news showcases Contour’s ongoing effectiveness at digitising the trade finance process and marks a continued expansion of its network.
To meet the needs of its client Guangxi Shenglong Metallurgical China CITIC Bank successfully processed import Letter of Credit (LC) services on the Contour network, bringing innovation to their service model. With this transaction, Guangxi Shenglong Metallurgical has joined Contour as a new buyer on the network. Rio Tinto, together with its advising/presenting bank, DBS Bank, has also been executing a steady pipeline of transactions on the network since May 2020.
This latest trade of iron ore has benefited from an enhanced degree of collaboration that Contour’s network offers. Barriers to the transaction usually caused by an overreliance on paper-based processes are overcome with this digital solution. Through using Contour’s network, all parties have the autonomy to control and manage their data, with counterparties accessing that information to advance the transaction to the next stage. As a decentralised network, no single party – including Contour – controls the data, ensuring security and privacy for those involved.
The benefits of digital trade finance solutions are becoming increasingly apparent as Contour sees continuous transactions from existing members as well as new organisations joining the network. The ability to streamline the trade finance process, while improving communication between trading partners and reducing administration costs makes a strong case for trade finance digitisation becoming the norm.
Carl Wegner, CEO at Contour, said: “Our expansion continues to showcase the merits of a blockchain network for trade finance. Thanks to the continuous support by our members, and with China CITIC Bank piloting our network, we are changing the way trade finance is conducted. Our goal as a network is to create a unified solution to the barriers within trade finance. Documentation for Letters of Credit, in their various forms, pose huge issues for those looking to improve efficiency. However, with a digital-first solution, we can improve the entire process, save money, and make the sector far more effective. However, to make any lasting change, digitisation needs to have support from every level. As an industry, we can fail alone or succeed together. Through innovating as a collective, we can improve the overall process of trade finance.”
Sriram Muthukrishnan, Group Head of Trade Product Management, DBS Bank, said: “The importance of collaboration across the trade ecosystem should not be underplayed. There is great merit in having all participants plugged into a single platform with real-time transparency to trade information which has broad applications in international trade, from financing, trade facilitation to settlement and risk mitigation. The value proposition for blockchain is its ease of use and transparency of information on goods, transactions and participants across the entire trade ecosystem. Its immutable properties offer validation that there has been no corruption of the data, enhancing trust between counterparties and banks providing trade finance – which is increasingly critical in the challenging environments we operate in today.”