The global trade finance industry has been crippled in recent times. Some prime reasons for catalysing this process are - excessive costs, risks involved in global trade and inefficiencies of some ageing technologies.
Well, in this situation the entry of Contour Blockchain is acting as a blessing in disguise.
But, what is the Contour Blockchain platform?
How did it get started?
What does it do?
Let us find out!
In the trade industry, they are contacts arranged by banks that give a degree of guarantee to the sellers that they will be paid by the buyers. The concept of a letter of credits basically finds its existence in the cross border financing and global trade.
In the global trade industry and cross border financing, things can be uncertain. Companies present in far off countries often do not trust each other. Not only this, the legalities of transactions can be vague and the amounts involved in such trades are too big for any glitch to happen!
This is where the corporate banks jump in with letters of credit!
They let the companies involved in global trade and cross border financing bring a kind of trust to the table. But, earlier the entire process involved tonnes of paperwork and the involvement of several players such as sellers, buyers and the banks. Sadly, all of this lacked interconnectivity resulting in slowing the process and increasing the overall cost involved.
Thus, the use of LCs declined!
The decline in the use of Letters of credit for global trade financing in 3 decades has been from 85% to just 15%. But, thanks to the project Contour that pumped in a new life to its usability. Let us find out more about it!
The project of Contour Blockchain can be termed as a fresh and digitised take on global trade financing and its operations.
Backed by Corda, the platform was made for smooth creation, exchange, approval and issuing of letters of credit involved in the global trade. This integrated system of Contour Blockchain has mostly amended the flaws in the processing of letters of credits before. Originally, it was known as Voltron Blockchain but later it got rebranded as Contour Blockchain.
The formation of Contour took place after a group of banks and some financial firms came together to work on a project that would make global trade financing an easy experience. It is backed by CryptoBLK and R3 who bring in all their technical expertise to the project.
Although the project initially had these 12 members, now it has more than 50 banks and corporate firms that are using the platform. The members using it for global trade financing get uninterrupted services at much lower rates and at work is done at a relatively faster pace.
With the Contour Blockchain, the members can make trade documents that are later processed and verified on the platform. There many such benefits the members can avail.
But before we jump to knowing those benefits, let us cover the features of the Contour platform.
● The Contour platform supports hybrid deployment
● It provided encryption for security purposes
● It enables better integration and connectivity around the global trade industry
● The Contour Blockchain is effectively scalable.
When in 2020 the live production kicked started on Contour, banks and corporates were presented with benefits they can avail by becoming its members and they are-
● It reduces the fuss of paperwork and the time consumed in the entire process
● The credit settlements are relatively faster
● There is a high degree of protection they can from cheating and frauds
● The overall operation efficiency increases
● There is a reduction in credit risk management
● It also reduces the cost involved in trade processing
● There is improved transparency in the entire financing process
Contour Blockchain is different in the sense that it uses the idea of decentralisation to aid banks and corporates to set a global trade network that is transparent and easy.
The main idea is to digitise the ‘letters of credit’ that have served as one of the oldest resources for carrying out global trade financing.