A quartet of banks have joined an IBM-led, UBS-backed initiative to build a new global trade platform based on blockchain technology.
The new platform, Batavia, is expected to be built to support trade finance for transactions across all modes of trade, with its open platform to be available globally.
Bank of Montreal, CaixaBank, Commerzbank, and Erste Group will be working "collaboratively" with UBS and IBM, in consultation with the transportation industry, as well as the banks' customers, to ensure the platform can eventually be commercialised.
Pilot transactions with customers on the network are pencilled in for early 2018.
According to the companies, Batavia advances the work initiated by UBS and IBM to develop a trade finance platform built on IBM Blockchain, the tech giant's enterprise offering launched in March and powered by the Hyperledger Fabric Blockchain framework, which is hosted by The Linux Foundation.
Blockchain is a type of distributed ledger technology (DLT) originally conceptualised to facilitate the trading of the bitcoin cryptocurrency. In a nutshell, blockchain allows for the tracking of digital assets so that a level of consensus can be established, and previous transactions agreed upon.
It is hoped that Batavia will help organisations more easily build multi-party, cross-border trading networks as it will allow transacting parties to view the progress of a shipment as it leaves the warehouse, is loaded onto a carrier, and arrives at the receiving port, automatically releasing payments incrementally along each step of the process, the companies explained.
"In working with hundreds of clients to implement blockchain solutions, financing global trade has emerged as one of the use cases most in need of innovating," said Fabio Keller, IBM project lead.
"Targeting the creation of large, global, multi-modal networks that bring transparency and trust to each step of the trade process is what makes Batavia a platform with so much potential to transform the way companies around the world do business with one another."
IBM partnered with a group of companies across the global food supply chain in August in a bid to prevent contaminated food from reaching consumers.
Dole, Driscoll's, Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestlé, Tyson Foods, Unilever, and Walmart will work with IBM to identify new areas where the global supply chain can benefit from blockchain.
IBM Blockchain will allow the consortium to trace contaminated product to its source in a short amount of time.
Similarly, Borsa Italiana, the Italian subsidiary of the London Stock Exchange Group, announced it was using IBM Blockchain to help small-to-medium enterprises in Europe access credit and link into digitising certificate data.
IBM and shipping giant Maersk also partnered recently to use blockchain technology to conduct, manage, and track transactions in the shipping supply chain.