Another transaction from İşbank utilising blockchain technology

​İşbank executed its second pilot transaction in foreign trade utilising blockchain technology. The transaction was executed between Sanko Holding - Süper Film, Brückner Group, Commerzbank and İşbank over the Marco Polo platform. The transaction, for which a payment commitment was granted, was for the procurement of machinery parts from Germany to the production facility of Süper Film, an export oriented company, and it was executed through distributed ledger technology (DLT) on the basis of data matching. The transaction, which is more complex than the first due to invoice, bill of lading, deferred payment and smart contract usage, and ordinarily would have lasted for days due to document examination and agreementprocedures, was completed in a very short period of time, thanks to the convenience and trust offered by blockchain and DLT technology.

Being the first Turkish bank to have offered payment commitment in foreign trade through blockchain technology, İşbank performed its first transaction between Şişecam, Kuraray Europe GmbH and Commerzbank on May 27, 2020. This second transaction is different in terms of the type of good, sector and parties and also differs from the first transaction as it contains more complicated processes such as the coverage of more than one invoice and bill of lading and the granting of commitment for different types of payment within the same transaction. 

"Blockchain technology will boost security, speed and operational efficiency in foreign trade"

Delivering a statement regarding the transaction, İşbank Deputy Chief Executive Şahismail Şimşek emphasized that speed, reliability and commitment were of great importance in foreign trade transactions. Pointing out that the need for banking services based on the matching of data and electronic data became more prominent in foreign trade throughout the pandemic as it became more difficult to send and check documents in foreign trade, Şimşek said: "Being aware of this reality, İşbank continues to specially position blockchain technology in its digitalization efforts".

Stressing that global trade materialized through open accounts to a very significant extent and firms were exposed to risk in cross-border trade without any payment commitment and by doubting about the reliability of documents, Şimşek made the following remarks: "Importance of payment methods based on physical documentation is decreasing due to the Covid-19 pandemic and technological developments throughout the last year. However, the commitments and financing resources offered by the banking system presenting digital solutions for speed and security in foreign trade are of great importance in mitigating the risks of companies. In this regard, Marco Polo Payment Commitment's blockchain-based DLT solution offers companies the opportunity of offering payment commitment and eliminating the risk of cash flow provided that the conditions in the smart contract are fulfilled and data is matched. We generate solutions to protect our clients with new products in addition to conventional solutions in a rapidly-changing foreign trade environment."

Highlighting that blockchain and DLT technology were being tested in many places around the world for the purpose of facilitating foreign trade, Şimşek stated that as the first bank introducing these developments by testing them with leading companies and in different sectors in Turkey, they continued to strive to make it available for use by all clients in a secure and easy way.

Reminding that they became the first Turkish bank to have executed a blockchain transaction in foreign trade during last May and thus opened the doors of a more reliable and easier era for the financing of foreign trade based on the matching of data, Şimşek went on to say: "Through the second pilot transaction, we continue to reinforce our work on the financing of foreign trade and supply chains over the blockchain technology and take pride in offering brand new experiences for our clients."

In his statement, Finance Director of Sanko Holding Mustafa Günbulut said: "We are very glad to be one of the firms executing one of the first transactions via the blockchain technology in cooperation with İşbank, Commerzbank and Marco Polo Platform. As Sanko Group, we strive to gradually increase our contribution to our country's production potential with our 116-year experience and 14 thousand employees while we also continuously research and improve our processes to use technology in total value chain in a more effective way. Being aware of the value to be added by the blockchain technology to the international supply chain and our country, we are pleased to be one of the leading companies in this sphere!"

Main features of the payment commitment offered on the Marco Polo Payment Commitment platform:

- Within the platform, importers, exporters and banks can draw up their smart contracts as 4 parties and enter their own trade data.

- The companies and banks involved in the transaction can review each other transparently over the same platform as they approve the transaction.

- Banks can rapidly undertake payment without dealing with document checking processes.

- Firm gain operational speed by handling foreign trade document management outside the banking system.

- As for foreign trade products executed via conventional letter of credit or policy-based payment commitment, banks complete many processes on behalf of the firms upon their instructions. However, this platform allows firms to draw up their smart contract with banks for the respective transaction, place orders, upload invoices and logistics data and review banks’ payment commitments in the same platform and simultaneously.

- Thanks to blockchain technology, the terms of the smart contract and the parties entering the data are apparent. It is not possible to change or delete the smart contract and the underlying data without the consensus of all parties.

- Payment commitment transactions can be completed in a very short time through DLT-based, simple and easy Payment Commitment method instead of letter of credit transactions that will take days to complete.