UNIT IV

Use Case: 1
What makes a good blockchain use case?

1. Find a business problem - Talk to your clients, or think through an existing client (or
industry) where exists a genuine business problem which CANNOT be solved by other
existing technologies. This is the first step in ensuring any technology, such as blockchain,
is not being used as a hammer in search of a nail.
2. Identify the network of participants - If criterion #1 is met, outline the network of
participants, within the company or industry. The network could be various business units
with a single organization, organizations within an industry, or across industries. Identify
the asset(s) these participants are going to be exchanging on this network, and the
transactions these participants are going to be doing. If you cannot do this, go back to step
1.
3. Define the need for trust - For the business problem at hand, articulate the need for arriving
at consensus (even though the participants are known or permissioned), and establish
provenance of the asset(s) being transacted on the network.

Financial Services:

The financial services industry contributes around 20% to the global gross domestic
product;(GDP). The global financial system deals with trillions of dollars a day and serves billions
of individuals, but the financial industry has certain challenges as well.

Blockchain could be the possible solution to reduce transaction cost, overcome inefficiencies,
eliminate intermediaries, and reduce economic crimes in the global financial system. Smart
Contracts in blockchain finance can help build a transparent and trusted system across participants
in the network.

Cross Border Payment:

Since banks charge additional cost for every transfer, the process of transfer of goods or payments
across borders becomes expensive and slow.
For example, if someone has to transfer money from the USA to Russia, the transfer process has
to go through one or more financial institutions before it reaches the receiver. Blockchain allows
individuals to send and receive money with minimum involvement from different entities. As of
now, the costs of remittance are between 5-20%.
But a study done by Deloitte says, blockchain could cut down the costs to 2-3% of the total amount
by providing secure and real-time transactions across borders.

What qualifies as a currency?

In economics, the following criteria must be satisfied:
 – Medium of exchange: Are merchants willing to accept the currency in exchange for goods and
services
– Unit of account: Is it a measure of the real value of goods and services (e.g., would a merchant
be willing to accept the same value regardless of relative currency fluctuations)
– Store of value: A mode of investment

Blockchain’s role in banking

Blockchain technology provides a way for untrusted parties to come to agreement on the state of
a database, without using a middleman. By providing a ledger that nobody administers, a
blockchain could provide specific financial services — like payments, or securitization — without
using a middleman, like a bank.
Further, blockchain allows for the use of tools like “smart contracts,” which could potentially
automate manual processes, from compliance and claims processing, to distributing the contents
of a will.
For use cases that don’t need a high degree of decentralization — but could benefit from better
coordination — blockchain’s cousin, “distributed ledger technology (DLT),” could help corporates
establish better governance and standards around data sharing and collaboration.
With global banking currently a $134T industry, blockchain technology and DLT could
disintermediate key services that banks provide, including:

1. Payments: By establishing a decentralized ledger for payments (e.g. Bitcoin), blockchain

technology could facilitate faster payments at lower fees than banks.
2. Clearance and Settlement Systems: Distributed ledgers can reduce operational costs and bring
us closer to real-time transactions between financial institutions.
3. Fundraising: Initial Coin Offerings (ICOs) are experimenting with a new model of financing
that unbundles access to capital from traditional capital-raising services and firms.
4. Securities: By tokenizing traditional securities such as stocks, bonds, and alternative assets —
and placing them on public blockchains — blockchain technology could create more efficient,
interoperable capital markets.
5. Loans and Credit: By removing the need for gatekeepers in the loan and credit
industry, blockchain technology can make it more secure to borrow money and provide lower
interest rates.
6. Trade Finance: By replacing the cumbersome, paper-heavy bills of lading process in the trade
finance industry, blockchain technology can create more transparency, security, and trust among
trade parties globally.

Clearance and Settlements Systems

Key points

 Distributed ledger technology could allow transactions to be settled directly, and can keep track
of transactions better than existing protocols, like SWIFT
 Ripple and R3, among others, are working with traditional banks to bring greater efficiency to
the sector

Traditional banking system for settlements:

The fact that an average bank transfer — as described above — takes 3 days to settle has a lot to
do with the way our financial infrastructure was built.
It’s not just a pain for the consumer. Moving money around the world is a logistical nightmare for
the banks themselves. Today, a simple bank transfer — from one account to another — has to
bypass a complicated system of intermediaries, from correspondent banks to custodial services,
before it ever reaches any kind of destination. The two bank balances have to be reconciled across
a global financial system, comprised of a wide network of traders, funds, asset managers and more.
If you want to send money from a UnicaCredit Banca account in Italy to a Wells Fargo account in
the US, the transfer will be executed through the Society for Worldwide Interbank Financial
Communication (SWIFT), which send 24 million messages a day for 10,000 financial institutions.

Because UnicaCredit Banka and Wells Fargo don’t have an established financial relationship, they
have to search the SWIFT network for a correspondent bank that has a relationship with both banks
and can settle the transaction — for a fee. Each correspondent bank maintains different ledgers, at
the originating bank and the receiving bank, which means that these different ledgers have to be
reconciled at the end of the day.
The centralized SWIFT protocol doesn’t actually send the funds, it simply sends the payment
orders. The actual money is then processed through a system of intermediaries. Each intermediary
adds additional cost to the transaction and creates a potential point of failure — 60% of B2B
payments require manual intervention, each taking between 15-20 minutes.
Solution using Blockchain for Settlements:
Blockchain technology, which serves as a decentralized “ledger” of transactions, could disrupt this
state of play. Rather than using SWIFT to reconcile each financial institution’s ledger, an interbank
blockchain could keep track of all transactions publicly and transparently. That means that instead
of having to rely on a network of custodial services and correspondent banks, transactions could
be settled directly on a public blockchain.
Further, blockchain technology allows for “atomic” transactions, or transactions that clear and
settle when a payment is made. This stands in contrast to current banking systems, which clear and
settle a transaction days after a payment.
That might help alleviate the high costs of maintaining a global network of correspondent banks.
Banks have estimated that blockchain innovation could cut at least $20B worth of costs from the
financial sector by providing better infrastructure for clearance and settlements.
EXAMPLES OF IMPROVED TRANSACTIONS THROUGH BLOCKCHAIN
Ripple, an enterprise blockchain services provider, is the most prominent player working on
clearance and settlement. While the company is best known for its associated cryptocurrency XRP,
Ripple — the venture-backed company — is building out blockchain-based solutions for banks to
use for clearance and settlement.
Ripple Protocol and Network:

Protocol for banks to clear and settle payments in real time through a distributed network

• Consensus allows payment exchanges and remittance to happen without need for a centralized
clearing house

• Average 5 second confirmations; no mining, custom protocol that hasn’t yet been validated for
correctness and fault tolerance

• Gateway nodes convert fiat currencies to XRP (currency in Ripple)

• Market-makers convert from one currency to another

• Centralized governance, with Ripple still holding a large fraction of the crypto currency

Stellar Protocol and Network

Decentralized, hybrid blockchain platform with open membership; Lumens as native asset

• Federated Byzantine Agreement (FBA) – quorums formed based on participants individual trust
decisions, followed by agreement within quorums

• 2-5 second transaction clearance

• Anchors act as bridges between a given currency and Stellar network

• Has a distributed exchange: pay in EUR with INR balance and network will automatically convert
it at lowest rate for you

SWIFT messages are one-way, much like emails, which mean that transactions can’t be settled
until each party has screened the transaction. By integrating directly with a bank’s existing
databases and ledgers, Ripple’s xCurrent product provides banks with a faster, two-way
communication protocol that permits real-time messaging and settlement. Ripple currently has
over 100 customers signed up to experiment with its blockchain network.

Comparison:
With paper-world trading, the time frame for clearing and settlement of a transaction is generally
referred to as ‘T+3’ – that is, three days after the trade (T), the transaction is settled.

With blockchain technology, the entire lifecycle of a trade – execution, clearing and settlement
– occurs at the trade stage. With a digital asset, trade is settlement, and the cryptographic keys and
digital ownership they control can lower post-trade latency and counterparty risk.

Know Your Customer (KYC)

KYC is a regulator governed process of performing due diligence for verifying the identity of
clients. KYC is a manual, time consuming and redundant across institutions.
Sharing KYC information on Blockchain would enable financial institutions to deliver better
compliance outcomes, increase efficiency and improve customer experience.
Problems and Deficiencies:
 Work done in collecting KYC information unnecessarily replicated by multiple
institutions.
 Isloated view of customers and their transactions insufficient to detect money laundering
 Uncertainty in knowing if implemented practices are sufficient.
The Idea Behind Blockchain and KYC
Each company has to verify your identity somehow, and it’s particularly important for financial
institutions. This gave rise to ‘know your customer,’ or KYC protocols to help companies ensure
they know who they are doing business with. Typically this involves a long, drawn-out practice
where certain documents are shown, and some sort of background check or verification takes place.
Blockchain and KYC: Current Challenges
There is no global standard, so KYC practices vary by institution. This leads to redundant work
and limits the ability for different financial institutions to collaborate to verify identity. Customers
are subject to time-consuming and difficult-to-accomplish onboarding processes when opening
new accounts.
Regulations are often changed, creating costly and effort-intensive obligations for companies to
comply. Also, material changes in customer information are often not being updated, which causes
inaccurate information in many bank systems.
Blockchain Solutions for KYC
Blockchain-based KYC has many inherent advantages. Many companies are working on a ‘digital
signature’ that would keep a secure copy of all your KYC-compliant documents stored on a
blockchain. Particularly if this is a public blockchain, it would be decentralized and both
transparent and secure.
A bank or other financial institution who is looking to verify customer identity would simply need
to be given permission to access the personal information, making blockchain KYC incredibly
efficient. It would also be standardized, so every financial institution globally would be able to
share and view the same data
Updates to personal information would be done in the blockchain, meaning any institution using
the system would also be privy to any information changes. Seamlessly, customers could update
their personal information across all their accounts simply through their digital signatures. KYC
using blockchain would mean that they wouldn’t need to contact each institution with changes,
and the institutions would never miss such changes as they do now.
Blockchain in KYC is one of the most promising applications of the decentralized technology,
serving a real need by decreasing KYC administrative costs and lost time while at the same time
increasing security and transparency.

Capital Market
The capital markets industry is going through profound changes in business dynamics due to
regulation, technology-led market disruption, and transformed economics of core business areas.
The era of digitalization has resulted in sweeping changes to the industry mindset – while many
firms took nearly a decade to stabilize after the 2008 crisis, they were soon confronted with
expectations of a new way of doing business as a result of the digital revolution. These new
expectations meant changing norms in an industry with long-persisting issues like:

 Lengthy settlement cycles (US SEC finally enforced T+2 settlement mandate in Sept 2017
while instruments like leveraged loans still take weeks to settle trades)
 High costs of collateral after implementation of regulations like Dodd Frank, Basel III
 High transaction costs due to presence of intermediaries in payments, asset exchanges etc.
 Inefficiencies in processes like reconciliation
With the advent of Blockchain, capital markets firms already have the next level of disruption
within their sights and many of the traditional challenges could well be addressed by the
technology behind bitcoin. The basic functions of blockchain are:
a) Decentralized storage of the transaction/asset data across all participants
b) Immutability of data stored due to hashing principles
c) Smart contracts which can execute transactions / actions based on business rules
The benefits and impact of Blockchain could be far-reaching in capital markets across buyer side,
seller side, and market infrastructure with the promise of eliminating or reducing the role of
intermediaries. There are several potential use-cases based on the challenges due to multiple data
stores and stakeholders, intermediaries, and limitations of existing technology solutions (Figure 1

Figure 1 – Capital markets blockchain use cases

These use cases can be built using public, private, or permissioned (consortium) blockchain
configurations depending on the contribution required from the participants in the network. While
there is a plethora of use cases in capital markets, real-time settlements and collateral management
are some of the high-potential opportunities.
Use Case 1: Real-Time Trade Settlements
There is an inherent trade default risk to the trading parties due to the lack of a mechanism which
monitors the positions of various financial instruments on a real-time basis. Currently, clearing
houses act as intermediaries and absorb this default risk. However, the presence of intermediaries
has extended the trade settlement cycle timelines.
In a blockchain system, once a trade is executed on an exchange, the trade details are passed to a
smart contract maintained on a permissioned network. The smart contract syncs up with the ledger
positions of the instruments maintained on blockchain and does a real-time check on the
availability of the traded instruments (Fig. below). As the rules written on smart contract and the
position ledger on blockchain cannot be tampered, this ensures trust and transparency for the
trading entities, thus settling the trade on a real-time basis. Enabling a near real-time settlement
will reduce the counter party risk (credit risk, exchange risk, etc.) and eliminate issues around
reconciliation, communication, and settlement errors.

Figure 1 – Settlement process on Blockchain

Mortgage Process:
Insurance:
The prevalence of insurance in our life is nothing new. It has been running for thousands of years.
Right now, we are living in an insurance industry that depends heavily on brokers. It is common
for brokers to call up people and convince them to take up a policy.
The approach is to make a paper contract which means the inclusion of humans errors during the
draft or when claiming the insurance. All-in-all, it all makes things complex for all the parties in
the pipeline including the insurers, brokers, and consumers. We also need to take into consideration
the risk associated with the whole process.

The blockchain is the technology that can transform the industry. However, it is not as impactful
right now, but it does show promise. To get a better understanding, we first need to understand
how blockchain impacts or changes in the insurance industry? Also, we need to know which use-
cases will have a significant impact in the long run. For insurance companies, blockchain insurance
is the newest term that they need to deal with. It will give rise to blockchain insurance companies
which will make the most of what blockchain has to offer.
Right now, we can say that we have a lot of Proof of concept projects where the ideas are more of
a concept than a reality. Also, insurers need to redo everything including changing their insurance
business model. This will take time and proper testing before substantial changes can be seen in
the market.
The four blockchain use-cases and application include the following.
1. Fraud Detection and Risk Prevention
2. Health Insurance
3. Reinsurance
4. Property and Casualty(P&C) Insurance
Blockchain Insurance Use-Cases and Blockchain Insurance Applications
1. Fraud Detection Prevention
Problem: Frauds in insurance is a big problem which both the organizations and the end users
wants to be solved. With insurers not truly invested in solving the fraud issue. Their approach to
solving fraud has always been less than required. However, the use of anti-fraud technology is
quite common among insurers with as much as 95% of them using it.
Even with all the precautions and use of anti-fraud technology, insurers still have to suffer from a
large number of frauds. According to reports, the insurance industry suffers from 80$ billion per
year. Both the insurance companies and the end users suffer due to fraud. On average, a family
can lose anywhere from $400 to $700 per year. In short, the standard method fails to prevent frauds
considering the sheer complexity that the insurance industry offers. Most of the time, a visibility
issue occurs when information is sent between peers including the insurers, reinsurers and the
claimers. The paperwork also enables criminals or fraudsters to modify the information and hence
make frauds.
Solution: Blockchain can solve the fraud problem thanks to the transparency it has to offer. Better
coordination between insurers means that fraud can be combated properly. The distributed ledger
ensures that the transactions done on the blockchain are permanent. This means that no data can
be modified once written which provides the basis of data security. Claims can now reside on the
distributed ledger making it easy for the insurers to verify the information when the time comes.
To improve fraud detection, significant insurers gather data publicly and then predict fraudulent
activities. With the data, patterns are revealed which in return helps to improve recognition.
However, the challenge is to share sensitive data across organizations have always been there
which makes the whole process complex. The aim is to build a fraud detection platform that can
work network-wide by also keeping the privacy in check.
Blockchain lets insurers to do just that. It lets stop fraud and bring more coordination among
insurers which can benefit indefinitely.
So, what frauds can be stopped using blockchain? Let’s list them below.
1. Stopping or reducing counterfeit is the number one benefit with the help of digital
certificates.
2. Double spending or booking can be eliminated where clients cannot claim for the accident
twice.
3. Removing unregistered sellers and reducing premium.
Blockchain insurance companies that are using blockchain to fix frauds include Etherisc.
2. Claims Prevention and Management
Problem: Keeping frauds aside, another big issue that the insurance industry suffers from claims
prevention and management. It takes time for insurers to gather all the required information while
verifying or settling an insurance claim. This can lead to problems considering the severity of the
claim.
Another challenge is to find out the right fullness of the claims. It is common for claimants to forge
false documents which can lead to claims that never happened.
Solution: Blockchain, when combined with modern technologies, can enable insurers to create a
transparent yet capable customer-focused claims model. The model should depend heavily on trust
which means that it needs to be transparent to a great degree. The claims prevention aspect of
insurance can benefit heavily from the information regarding the event’s location, analytics and
external risks associated with the event.
Blockchain’s distributed nature enables an implementation method which puts both insurer and
the claimant in the same network. The insurers or other third-party parties can easily capture
information regarding forms, police reports, evidence and soon. Other key aspects of technology
that can help in the process can be either mobile phones or sensors attached to the other devices
attached either to the entity or around the area where the event takes place. These will streamline
the whole process and ensure proper claim submissions. In return, it will improve customer
satisfaction and improve coordination between all the parties involved in the claim process.
So, how would an insurer know when an event takes place? The sensor permission to provide
information can alert the required parties when an unplanned event takes place. In short, insurers,
in combination with blockchain and other technologies such as satellite, sensor data, mobile
technology, and others can help solve the problem of trust in the system. Blockchain acts as the
backbone as it offers transparency from the onset. Moreover, blockchain can also be used to
facilitate payments if certain criteria are met, improving the time it takes to handle a claim.
Companies using blockchain to solve this issue:
3. Property and Casualty Insurance
Problem: Property and casualty insurance is one of the most important segments of insurance as
it is used heavily by individuals, startups or even enterprises. The property and casualty insurance
accounts for 48% of all US premiums and is considered significant all across the world. However,
it is also plagued with problems such as data evaluation for claim processing, manual data entry,
coordination across parties, and so on. The manual data entry also leads to errors which later result
in the loss for any of the parties depending on the type of error occurred.
The lack of a proper framework for claims processing hurts the end user. For example, if your
house got damaged due to negligence, then you need to fill the claims papers and then ask for
claims to your insurance provider. Once done, the insurance company will then proceed with the
claims and verify them. However, it can get delayed or halted depending on how the offender’s
insurance company handles the claim. This issue occurs due to the mismatch between how the
insurers handle the claims from their clients.
Solution: Blockchain can help solve the current problems of property and casualty insurance. The
approach is to manage the physical assets digitally. As we already know that blockchain can be
used to write contracts in code. This also means that business rules can be implemented and
executed automatically. In short, claims can be processed automatically by using smart contracts.
Also, all the changes can be traced for authenticity which makes them auditable.
The key here is smart contracts as it offers the required functionality of changing paper contracts
into programmable code. The smart contracts, in turn, can be then automatically executed by taking
in all the information and then executing it accordingly. The liabilities can also be calculated using
smart contracts which then can be paid out to all the participants.
Auto insurance can take benefit of the overall technological growth as the sensors on the vehicle
can be sent automatically if a crash happens. The smart contract will automatically take the next
steps such as towing or medical services. Next, it will try to gauge the damage to the vehicle with
the help of sensors mounted on the vehicle and also through manual inspection. The smart contracts
will then record when new reports arrive. After getting all the required information, the smart
contract will settle the claim. All this can be done with minimal or no human intervention.
Blockchain insurance companies that are using blockchain to solve this use cases
include Insurwave.
4. Health Insurance
Problem: We recently covered blockchain impact on health industry by discussing the use cases
and application. However, we didn’t cover health insurance which also plays a crucial role in
determining customer satisfaction. One of the major issues includes non-access to patient’s data
due to confidentiality. This leads to a lack of information/data required to the claim insurance
which costs both hospitals and the patient.
Any patient dealing with health issues is bound to visit multiple doctors across his lifetime. This
leads to issues when sharing information from one doctor to another. Overall, everyone in the
healthcare industry ecosystem including insurers, providers, and patients suffers from glaring
issues. Most of the time, a healthcare organization will store the information to their own silos
rather than share it with other service providers. Also, there is an issue of duplicate or error
information that gets stored without any form of rectification process. Non-usage of the connective
framework also means more administrative overhead and even a headache for the patients.
In short, there are two significant problems with the healthcare which affect healthcare insurance
directly or indirectly.
Rigid privacy laws mean information cannot be shared seamlessly among healthcare institutes.
Outdated backend infrastructure also hampers medical records sharing.
Solution: Blockchain is a cryptographically secure network that provides healthcare with the
necessary infrastructure to function properly. It can be used to create privacy in the network and
in return help the healthcare industry save billions of dollars. The main objective of blockchain to
create a network that ensures that the patients are always in control of their medical data. By doing
so, they can let patients decide when and how their data is shared to the practitioners or medical
institutes.
The overall impact of the blockchain on healthcare means that insurance can also function as they
should. They can use the blockchain network for medical records of the patients and ensure that
they are correct. As blockchain uses a cryptographic signature it ensures data cannot be
manipulated by any means. The blockchain protects the data using timestamps. Also, the document
stored on the blockchain can be updated regularly to reflect changes. Both insurers and providers
can access the data anytime and make sure that the audit information is carried out without any
problems. Patients can also add more information to the audit in the process and add value to their
insurance claim.
Blockchain insurance companies using blockchain to solve this issue: MedRec
5. Reinsurance
Problem: Reinsurance is also a big part of the insurance industry. They protect the insurers and
protect their interest when natural disasters take place. Just like insurance helps people to mitigate
risks and manage unexpected life events, the reinsurance also does the same for insurers. For
insurers, reinsurance is all about mitigating risks when the odds are against them. For example, in
natural disasters and mass health epidemic, reinsurance can help insurance cope with all the claims
and demand.
The current solution used by reinsurance is inefficient at best. It is manually processed and
determined by one-off contracts. The current situation leads to complexities as each contract is
explicitly written which covers partial risk or a specific event. The real issue happens when the
event occurs. It can take up to 3 months for a contract to be decided which makes the whole process
hard to carry on for both the parties. Also, an insurer doesn’t just negotiate with one reinsurer, but
multiple ones, complicating the whole process. In short, no standard needs to be followed which
leads to different data standards across institutions.
Solution: As discussed above, reinsurance suffers heavily from the lack of information flow
between organizations. Blockchain technology can help solve the problem by providing a
streamlined network for information exchange between the parties. The use of shared ledger is the
key here where the necessary information is updated as soon as it becomes available. This means
that both the parties, insurers, and reinsurers can connect and share information to settle claims
faster. This efficiency can help the industry function more efficiently and hence decrease the
operational cost associated with it. The consumers also benefit from it as it reduces the overall cost
associated with claims.
Blockchain insurance companies using blockchain to solve this issue: B3i
Internet of Things(IoT)
Another interesting use-case of blockchain for insurance includes the Internet of Things(IoT). In
the day of the connected world, it is common for devices to stay connected and exchange huge
amount of data to be created and collected. This same data can be used by insurers and improve
their insurance-models based on usage.
Auto insurance market can benefit heavily from these usage-based models which can let them
gather data regarding insured vehicles. So, if a vehicle meets an accident, the information can be
collected and then sent to the blockchain based insurance network.

USE CASE: 2

Provenance in Blockchain
Provenance is building a system for materials and products to be traceable and transparent using
a new kind of data system called a blockchain. It is for securely storing information - inherently
auditable, unchangeable and open.
Blockchain in Trade/Supply Chain:
Overview of International Trade:
International trade transactions involve a multitude of actors and continue to rely extensively on
paper. In 2014, shipping company Maersk followed a refrigerated container filled with roses and
avocados from Kenya to the Netherlands to document the maze of physical processes and
paperwork that impact every shipment. The numbers speak for themselves: they found that around
30 actors and more than 100 people were involved throughout the journey, with the number of
interactions exceeding 200. The shipment took about 34 days to go from the farm to the retailers,
including 10 days waiting for documents to be processed.
A multitude of documents have to be submitted in the context of international trade transactions
(see Figure 3), which fall into four main categories :
 • documents related to the commercial transaction itself, including the sales contract, commercial
invoices and if needed, a packing list submitted by the exporter prior to exportation;
• documents related to trade financing, such as letters of credit;
•transport documents, including bills of lading, etc.; and
• documents for border procedures, including:
– certificates of origin
– delivered by chambers of commerce, but other bodies such as ministries or customs authorities
may also have this privilege in certain countries;
– sanitary and phytosanitary certificates, in the case of food, plant and agricultural products
– which are usually delivered by the ministries of health and agriculture;
– certificates of conformity that certify that a product or service meets the requirements of a
particular standard in the country of importation;
– export or import licenses, if required by the authorities of the exporter’s or importer’s country;
– customs declarations;
– customs inspection documents.
Blockchain Enabled Future State

Trade Finance Elaborated

 Offers a means to convert export opportunities into sales by managing the

risks associated with doing business internationally, particularly the
challenges of getting paid on a timely basis.

Trade Finance: Advantages Using Blockchain

Secure Shared ledger
• Unambiguous shared view of contract terms & status of goods across importer,
exporter, banks, common carrier, etc.
• Common store of all documents (L/C, B/L, Drafts, etc.)
• Smart contracts simplify process & reduce cost/time
• Automation of business workflow across organizational boundaries
• Improved transparency and accuracy of process workflow
• Flexibility to model a variety of contracts
(revocable/irrevocable L/C’s, confirmed/unconfirmed L/C’s, time/sight drafts,
bank/trade acceptances, etc.)
Example:
We. Trade: Trade Finance Network
What?
• Digital Trade Chain (DTC), is a blockchain-based international trading system for a
consortium of major world banks including:
Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale, Santander,
UniCredit and Nordea
• Enables accurate trading posture information, order to settlement control, risk coverage,
track and trace options
• https://www.we-trade.com/
Benefits
• Near-real time exchange of information on a secure platform that digitizes transactional
financing and other complex processes
• Continual business and compliance readiness in any regulatory environment
• Scalability that allows for rapid international expansion as business, regulatory, and
security opportunities converge
Supply Chain Financing:
Challenges:
 Difficult to obtain consistent view of status across all the entities (and hence lack of trust)
 Undertaking by Supplier not to submit invoice to two banks is the only mechanism to
avoid double-spend
 Prone to errors during certain manual steps
 Requires multiple costly, ad-hoc point-to-point integration for automation of processes
between Suppliers, Financier, and OEMs/Retailers/Purchasers
 In emerging geos like India, only a small fraction of potential marked is tapped by
Financial Institutions
Blockchain Solution Roles/Responsibilities

Corporate Buyer:

Raise Purchase Order or Upload Digitized Purchase Orders

 See the status of Purchase Order/Invoice
 See the GRN Status

Corporate Receiver
 Receive the goods from the Logistic Player
 Check the reflection of the GRN Status on the ledger
 Record any rejected item from Production Lines or after quality check
Supplier
 Respond to a purchase order by raising an invoice
 Raise ASN/Correct ASN based on 3PL’s Dispatch Schedule
 Multiple Invoices against one PO is allowed
 See the GRN Status of the Shipped Goods
 See the invoice payment status
3rd Party Logistics
 Publish Dispatch Schedule
 Record time of arrival
 Record time of receipt by Receiver
 Thus, provide proof of shipping commitments to the Supplier
Other Benefits
Financier
 Visibility into all purchase orders and invoices
 Visibility into GRN Status - this can be used for rich analytics
 See the invoice-financing advise details from purchaser
 Publish the event of approval of financing (without exposing internal
mechanisms, if any, to take decision)
 Publish the event of payment made
Ecosystem Benefits
 Suppliers and Buyers -- Smart Contracts will eliminate the errors due to
manual steps
 Suppliers and Financier -- Smart Contracts will result in automation benefits
and reduced time to finance
 Buyer – Easy access to financing will improve Supplier Performance
 Financier -- Reduced time to finance will result increased financing duration
 Financier -- Transparent Orchestration will attract more Purchasers and
Suppliers and increase the client base for the Financier
IBM Blockchain for Trade Logistics

Logistics data Challenges:

Key Industry Challenges:

Global Trade Digitalization:

Paperless Trade:
Shared Visibility:

Other Issues: Empty Container Repositioning

Blockchain Container Management
Food Traceability & Safety Enabled by Blockchain