The trade finance project is in its earliest stages and focuses on just a single aspect of the process. It combines payment transactions, foreign exchange payments and more, into one single, elaborate smart contract. Letters of credit can be used in large transactions by a purchasers bank to mitigate the sense of risk a seller experiences while the product is in transition. But these letters of credit can take as long as seven days to process, according to UBSs numbers, during which time additional risks can accumulate. Moreover, UBS said a letter of credit can weigh 500 grams and comprise 36 documents.
By programming that process into a smart contract on Hyperledger, bank’s representatives said they expect to be able to cut the processing time down from seven days to one hour. Besides the letter of credit process, the project also aims to incorporate the account opening process, to build a user-friendly interface, capable to operate on the go, from a transportation vehicle for example.
Much of the work was completed during an intensive two-day work session at the financial technology accelerator Level 39 in London. Startups including cloud-hosted blockchain startup Credits and Clause Match, a smart documents startup, also took part at the sessions. Though there are currently no contractual agreements between the startups and UBS, the companies participation was part of a larger UBS strategy, the bank continued.
It remains unclear how long it will take to complete the international trade project, the bank’s representative said in the end.
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