UBS has started executing transactions on we.trade, a blockchain-based trade finance platform that could be adopted soon by banks.
The platform targets small- and mid-sized corporate clients in Europe with bank payment guarantees and invoice financing. It is a bid to negotiate global contracts without the usual load of paperwork.
Blockchains offer a shared digital record to the previously paper-based world of global trade, and help reinforce trust between companies executing trade agreements. Services include bank payment guarantees and invoice financing, for which the banks charge a fee.
Trading fees on the platform can range between $2,000 a month (early users) and a $175,000 full annual membership license. Trialing a project can also cost up to $75,000 per year. We.trade is built by IBM on the open-source Hyperledger Fabric blockchain system, although it plans to bring in-house tech soon.
We.trade promises an up to 90% cheaper process thanks to distributed ledger technology.
The Swiss bank joins Société Générale, HSBC, Santander, UniCredit, Nordea, KBC, Rabobank, and Deutsche Bank, who are already active on We.trade.
Launched in mid-2018, we.trade is ahead of rivals like Marco Polo, a trade finance blockchain backed by TradeIX and R3 that's still in the pilot stage, CoinDesk reports. However, just last month, the Bank of America, the world's eighth-largest bank by total assets, announced it was going with Marco Polo, joining other network members like BNP Paribas, Commerzbank, Standard Chartered Bank, among others.