The pressures caused by the current economic crisis, outdated trade finance systems and growing geopolitical tensions are driving the international trade finance industry into an abyss.
To exacerbate the already critical situation, the recent trade finance scandals involving major players such as Hin Leong, ZenRock, Agritrade and Hontop Energy were responsible A loss of nearly $ 6 billion, largely borne by the banks.
To limit the risk of such threats, major banks such as ABN Amro, Société Générale and BNP Paribas have completely pulled out of this sector while others have raised the bar in their funding processes, said Samir Neji, Founder and CEO. from blockchain-based trade finance firm Dltledgers.
Neji said to Cointelegraph: “It is now much more difficult for traders and other companies moving goods around the world to obtain working capital. This is suffocating a sector that is already in trouble. “
By implementing the blockchain, Neji says, traders can bypass the tedious paperwork, email exchanges, and phone calls required to secure trade finance.
The distributed ledger technology can bring transparency to the business execution process by exchanging information in real time. added.
When traders invariably record everything from trading participants, documents, goods, contracts and payments on a single platform so that it can be tracked and authenticated, The likelihood that a trade is fraudulent would drastically decrease or possibly disappear entirelySaid Neji, adding:
“When banks find that their business is less risky, which they do, the dealer is in a much better position to attract funding and in many cases pays lower interest rates. This must be positive for the industry. “
Not only would blockchain regain banks’ confidence in financing world trade, it would also allow merchants to run their businesses smoothly during the ongoing pandemic. Neji highlighted the world’s first blockchain-based transcontinental wheat trade valued at $ 12 million that took place on the Dltledgers platform:
“This took place right in the heart of the quarantine […] The deal was carried out in five days. In contrast, the average business cycle for this type of trade is one month. “
Regarding the blockchain takeover by supply chain actors and trade finance Neji said it was important to stop talking to customers about blockchain and only show them the benefits the technology would bring.
According to the executive, it is not important that people know the technical aspects of the underlying technology in order to really benefit from it. He said Dltledger and the other companies working to include blockchain in trade finance need to work and work together to fight common enemies: paper documents, outdated processes and fraud.
“This is not a race; it is a global marathon,” Neji concluded:
“I think this blockchain hype is going to go away and platforms like ours are just going to take a back seat and deliver value through skilled engineers, probably the same kind of people who put color on TV and made phones years ago that were mobile and have.” the outside world brought to your computer. “