CBA’s successful 2018 ‘Trade-Chain’ experiment highlighted the combined benefits that blockchain technology can offer the trade and commodities industries.
Let’s take a look back at CBA’s commodities experiment that laid the platform for success.
From the beginning, Blockchain technology has had the potential to disrupt and change the way a number of industries do business. Some of the greatest potential lies with supply chains with CSIRO Data61 highlighting supply chains as a highly promising domain for the application of blockchain technology that offer significant opportunities into trade finance.
Through its Trade-Chain experiment, CBA’s Blockchain Centre of Excellence built on this theory by successfully shipping and tracking 17 tonnes of almonds from regional Victoria to Germany combining blockchain and Internet of Things (IoT) technology.
But what many don’t know is the Trade-Chain experiment was actually the second stage in CBA’s research into the impact of blockchain technology on the trade and commodities industries.
Looking back: ‘Commodities on Blockchain’ Experiment
In late 2017, CBA successfully demonstrated blockchain could cut time and cost while enhancing transparency and security in global commodities trading – how companies buy and sell raw inputs like copper and aluminium from mine to manufacturer.
Partnering with a major commodities player, CBA tested a blockchain platform to combine inventory management and trading – enabling counterparties to rapidly agree financing plus instantly transfer commodity ownership. While it usually takes days to negotiate, agree, confirm, amend asset ownership, sanction check, and settle, transactions on this platform took just 4 minutes.
The experiments provided a secure and unique digital representation of the underlying physical commodities, which are instantly transferable on ledger, and built smart contracts to negotiate and agree financing terms. The result saw a commodities blockchain bringing together physical commodities and financial markets together into a seamless digital ecosystem.
Why does this matter?
Paper processes, multiple communications and confirmations, and manual inputs are common pain points when it comes to financing assets. Replacing this with a streamlined digital process enables transparent, faster, more accurate transactions. For CBA, transactions could securely link to individual assets, preventing fraudulent or double financing by customers. For customers, reduced administration makes the process more efficient and seamless.
This successful Commodities on Blockchain experiment was the first phase in developing an end to end blockchain solution for the entire commodities ecosystem, and served as the key building block of the 2018 Trade-Chain experiment.
CBA’s Blockchain Centre of Excellence
2018 was a big year for CBA’s Blockchain team, with the successful completion of a number of major experiments spanning across debt capital markets, trade and commodities and Smart Money. Check out the videos from all three experiments below: