Eleven banks, including Bangkok Bank, BBVA, BNP Paribas, HSBC, ING and Mizuho, have developed a prototype application to streamline the processing of sight letters of credit and improve trade flows.

Built on R3’s distributed ledger platform Corda, the application aims to drive greater efficiencies, reduce costs and simplify today’s existing processes.

“Like so many of the processes and systems banks are forced to use today, the infrastructure that supports trade financing is extremely outdated and prone to risk and error,” said David Rutter, CEO of R3. “The work we have been doing with our members over the last year has shown that this challenge no longer needs to stand in the way of giving businesses access to the services they need to trade across borders. The application we have built is the first of its kind and we look forward to rolling it out to our Corda users across the world.”

Distributed ledger technology has the potential to improve customer experience and reduce costs across trade finance, an area that’s largely been unchanged for year, said Jim Bidwell, the head of trade services product management at RBS. The initiative is “a great demonstration of how we can collaborate to develop innovative solutions for customers,” he said.

The trade finance platform integrates a standardized user interface that allows carriers and shipping companies to prepare and validate shipping details when they onboard goods and deliver them to the buyer – even if they are on a different technology platform.

According to Ivar Wiersma, the head of innovation for ING Wholesale Banking, it has the potential to make the overall trade flow, currently hampered by outdated processes, faster and more cost effective.

“This is a great step forward in the process of digitalizing and standardizing the documentary trade finance process from start to finish, connecting multiple parties in the trade finance chain with the feature of interoperability of the different technologies these parties use,” Wiersma said.

The trade finance application was built following twelve months of development and testing. Several R3 member institutions intend to pilot the platform with the goal of making it widely available in 2018.

“To further enhance the prototype, we’ll continue to work with established and emerging title registry providers to ensure this solution can provide a secure and legal title transfer of goods in a live environment, and anticipate piloting the app on the R3 network before the end of the year,” said Vivek Ramachandran, the head of growth and innovation at HSBC Commercial Banking.

Craig Weeks, the senior vice president and manager of US Bank’s International Banking Group, pointed out the potential of distributed ledger technology to increase transparency and efficiency across the trade finance lifecycle. “This work has proven the viability of the technology to efficiently manage the process and we’re very much looking forward to testing this in an operational setting,” he said.

R3’s Corda platform is a blockchain-inspired open source distributed ledger platform built specifically for the financial services. Corda is the outcome of over two years of research and development by R3 and its consortium of over 70 of the world’s biggest financial institutions.

In May, R3 secured the largest ever investment for distributed ledger and blockchain technology with US$107 million as part of its Series A funding round.