Standard Chartered Bank has successfully executed a pilot transaction for PTT Group, PTT International Trading Pte Ltd and IRPC Public Company Limited, paving the way in transforming documentary trade with the first cross-border letter of credit (LC) issued over the Voltron blockchain platform in the oil industry.
Due to the significant cargo value, oil companies are often reliant on letters of credit as a form of short-term trade finance. However, this process is paperwork-intensive and requires up to five days for the delivery of these documents.
This pilot involved the shipment of an oil product from Thailand to Singapore. Standard Chartered was able to digitize and simplify the end-to-end exchange of information between all parties in the transaction on the Voltron platform, including the issuance, advising and negotiation of LC and presentation of documents.
As the documents were sent electronically, all trade participants can view real-time updates on the progress of the transaction. This resulted in a significant reduction of processing time to less than 12 hours, in addition to achieving greater transparency and cost efficiencies across the supply chain.
Wittawat Svasti-Xuto, chief technology and engineering officer, PTT Public Company Limited (PTT), revealed that PTT, as the national energy corporation, has perceived the opportunity to utilize innovative digital technology to not only support and strengthen its petroleum and petrochemical business operations, but also to enable the business to be adaptive for changes and create opportunities for trades and business operations among PTT Group.
With accumulated experience and expertise, PTT has successfully utilized blockchain technology to reinforce the business efficiency between IRPC Public Company Limited and PTT International
Trading Pte Ltd. Therefore, in this digital era, PTT is now ready to pursue new business opportunities for sustainable growth in the future.
Noppadol Pinsupa, president of IRPC Public Company Limited (IRPC), says, “Given digitization is one of IRPC’s top priorities as a part of GDP strategy – Growth, Digital and People, it is a great opportunity to work with Standard Chartered Bank on this international trading digitization journey. This cross-border LC blockchain transaction is actually one of our further steps of blockchain utilization apart from others.”
Supasachi Hongsinlark, managing director, PTT International Trading Pte Ltd, says, “Recognizing the importance and benefits of using modern technology, blockchain technology is used to improve the management process which increases trading efficiency and reduces turnaround time of the LC process. The system will provide more visibility to monitor trade finance flow in real time, which will improve transparency and credibility for the trading process and thus strengthen the relationship between our partners and stakeholders in the long run.”
Jordane Rollin, global head of Digital Transformation, Trade Product Management at Standard Chartered Bank and Voltron Steering Committee member, adds, “We are transforming trade finance by investing in technology and building partnerships. As the consortium prepares for full commercialization of the network, we are continuously getting feedback from our clients via pilots to enhance Voltron with new features. We have also started to ramp up on our contribution to this initiative to expand its offering beyond Letters of Credit and become a new industry standard for digitized traditional trade.”
Standard Chartered is one of the founder members of Voltron, a blockchain-based open industry platform to digitally create, exchange, approve and issue letters of credit. It most recently announced the launch of Trade AI Engine, a joint solution developed in partnership with IBM to enhance the client experience in trade document processing through increased operational efficiency and strengthened operational control.
Earlier this week, the bank also completed its first joint deep-tier supply chain financing transaction with Linklogis for Digital Guangdong, a joint venture between Tencent, China Unicom, China Telecom and China Mobile to bring digital government services to the local residents.
