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Japan’s 3rd Largest Bank Sumitomo Mitsui Banking Corporation Completes Test on Blockchain

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Sumitomo Mitsui Banking Corporation (SMBC), the third largest bank by assets in Japan announced the successful completion of a proof of concept (PoC) utilizing Marco Polo, a blockchain-based trade finance platform developed by R3 LLC and TradeIX Limited. SMBC is ready to begin utilizing R3’s Marco Polo trade finance blockchain on a commercial basis by the end of the year.

Proof of Concept (PoC)

The bank said last Friday, that a cross-border proof-of-concept (PoC) test was conducted based on actual cross-border trade flow involving Mitsui & Co, Indorama Ventures Group, Bangkok Bank Public Company Limited, and SMBC.

During the test exercise, Bangkok Bank issued a payment guarantee for Indorama Ventures to Mitsui & Co. Based on that guarantee, SMBC would have been able to undertake receivable financing in real time.

Traditionally, the parties’ exchanges of purchase orders, invoices and other documents, are paper based. With blockchain, all permissioned parties were able to view the progress of the transaction. This reduced the reconciliation time by automating the process. Through the PoC, each party was able to update data pertaining to purchase orders, invoices and shipping information based on the most real time information, and at the same time share this data with other parties.

The Marco Polo platform for a while now has been breaking new strides and on-boarding a number of members to its platform. Just over a week ago, the platform announced that it would be conducting the first trade transaction between Russia and Germany. The transaction will involve Russian institutions including Novolipetsk Steel Company (NLMK), and Alfa Bank, as well as Germany’s Commerzbank and Vesuvius GmbH, a metal engineering company.

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