It looks like the race to use blockchain technology for international trade financing is heating up today. Just hours ago Bank of America Merrill Lynch, HSBC and the Infocomm Development Authority of Singapore announced that they have developed a proof-of-concept pilot for the field.

Now the R3 consortium reveals that over fifteen of its members have completed two prototypes that demonstrate how distributed ledger technology can address the challenges facing the trade finance industry.

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The banking institutions involved in the trials R3 include: Barclays, BBVA, BNP Paribas, Commonwealth Bank of Australia, Danske Bank, ING Bank, Intesa Sanpaolo, Natixis, Nordea, Scotiabank, UBS, UniCredit, U.S. Bank and Wells Fargo. They designed smart contracts to process accounts receivable (AR) purchase transactions, also known as invoice financing or factoring, and letter of credit transactions.

R3 says its prototypes validate the technology as an alternative that is significantly faster, more reliable and cost-effective. It estimates that it can reduce operational and compliance costs of paper-based trade financing by 10 to 15% and provide a platform for banks to grow revenues by as much as 15%. The benefits include a reduction in fraud risk and removal of time-consuming reconciliation processes.

David Rutter, CEO of R3, comments: “Trade financing is a crucial income stream for banks and provides an integral role in enabling businesses in different countries to trade with each other with certainty and peace of mind. However, the processes used to facilitate trade financing have become antiquated and unfit for purpose in today’s increasingly digital world. These trials have proved that the blockchain-inspired technology used on our Corda platform holds the key to transforming trade financing for modern financial markets.”