Barclays and innovative start-up company Wave have become the first organisations to execute a global trade transaction using blockchain technology.

 The letter of credit transaction between Ornua (formerly the Irish Dairy Board) and Seychelles Trading Company is the first to have trade documentation handled on the new Wave platform, with funds sent via Swift. It is hoped this landmark transaction could herald a new era of simpler, safer and faster trade finance.

 Currently trade transactions of this nature often involve a high number of participants in different jurisdictions around the world, which in turn requires a significant amount of paperwork, counter-signing and courier journeys.

 The new blockchain based system developed by Wave uses distributed ledger technology to ensure that all parties can see, transfer title and transmit shipping documents and other original trade documentation through a secure decentralised network, eliminating many of the current inefficiencies in international trade. The new system could therefore speed up trade transactions, reduce costs for companies around the world and reduce the risk of documentary fraud.

 Companies around the world stand to save significant costs and time, with the shipping industry and financial institutions expected to be some of the biggest beneficiaries. Barclays has identified substantial direct cost savings that can be made on courier costs alone using the Wave system, and it could also bring down the time taken to complete an end to end trade finance transaction from days to a few hours.

 Wave was one of eleven companies to have gone through the Barclays Accelerator programme in New York last summer, during which time it received expert mentoring from the bank. Since then it has been working with Barclays’ Trade & Blockchain team in the UK and South Africa to explore the various use cases of its innovative technology. Barclays is also seeking to involve other banks in supporting adoption of Wave’s system, with the hope that this can develop into an industry wide improvement in how trade documentation is managed.

 This announcement follows other blockchain firsts and exploratory work by Barclays. Last year, the bank signed a proof of concept with Safello to explore how blockchain technologies can be harnessed in the financial services sector. Barclays was part of the initial group of banks to join the R3 consortium designed to spearhead crypto technology solutions in financial services and also was the first big British bank to form a partnership with a digital currency firm, Circle, facilitating social payments on the blockchain using Circle’s payments app by providing the underlying fiat currency accounts. More recently, Barclays, with its Smart Contract Templates application, publically demonstrated R3’s corda platform for the first time.

 Baihas Baghdadi, Global Head of Trade & Working Capital at Barclays, said: “One of the biggest headaches in global trade currently is the vast movement of paper required to facilitate transactions, with multiple organisations in the chain. That is why we’ve been very keen to partner with Wave in using blockchain technology to save time and money for our clients, and potentially transform trade finance for businesses around the world.”

 GadiRuschin, CEO at Wave said: “Effective use of blockchain technology really can have a huge impact on the future of trade. By adopting our system, trade can be done more easily and more cheaply. Studies show that as much as 5% of the cost of a trade transaction comes from the handling of documentation, so there is a significant opportunity to improve this element of the trading process. We think we’ve got the right answer, and look forward to working with Barclays to develop it further and create an industry wide solution.”

 David O’Rourke, Group Trade Finance Manager at Ornua Co-operative, said:  “Moving to paperless trade would be hugely beneficial in supporting the supply chain, through reduced costs, error free documentation, and fast transfer of original documents to our customers worldwide.”

 Following the successful pilot Barclays and Wave will be working with a select group of trade finance clients to develop the service further.