Contour To Consider Marco Polo With Shift Into Open Account Trade Finance
As per the latest reports on June 22nd, 2021, the digital trade finance network Contour has finished a series A+ fundraising round, planning to bring a new shareholder bank and declaring strategies to extend its blockchain-based contribution apart from Letters of credit (LC) into open account trade - historically the safeguard of competing network Marco Polo.
The participants in the fundraising round were existing shareholders Bangkok Bank, BNP Paribas, Citi, CTBC, HSBC, ING, SEB, and Standard Chartered. While the non-bank shareholders of Contour include Bain & Company, CryptoBLK, and R3. SMBC is appearing for the first time, becoming the first & only Japanese bank to join the Contour beta network in September 2020. This is the most recent in a series of strategic ventures for SMBC, which, recently this month, also took part in commodity trade finance platform Komgo’s funding round. Earlier, Contour joined hands with ThoughtWorks to digitize trade finance in China.
Though the amount of sum raised has not been revealed yet by the Contour, Carl Wegner, the company’s CEO, explains that the funds will be utilized to “double our organization size, as our network is growing quickly and we need to help the new interest and incursion of customers and transactions.”
Since progressing into beta as an independent legitimate entity in January 2020, Contour has achieved several firsts, including the first paperless renminbi-denominated deal in the iron ore industry in May, last year, and has supported various banks as members - including Singapore’s DBS, Vietnam’s HDBank, and South Africa’s Standard Bank.
Contour was completely live in October, turning into the world's first open-to-all, decentralized trade finance network. At the present, there are a total of 13 institutions that are utilizing Contour’s technology with their clients in a live business environment across 25 nations, and operation is in pipeline to increase adoption further - including a new domestic network in Bangladesh that was introduced last week. Also, Vietnam’s HDBank joined HSBC, StanChart-backed Contour trade finance blockchain, and became the first bank in Vietnam to do so.
To date, the only agenda of the platform was to digitize the LC processes, with outcomes from a worldwide trial with over 50 banks and corporates showing a decrease in processing times of over 90%, from somewhere in the range of five and 10 days to under 24 hours. With the help of this new funding, the platform says, it will now extend into new areas -especially open account trade, which as of recently has been the focal point of the Marco Polo Network.
Wegner says, “We are likely to shift into open account. The establishment for all trade finance begins with the purchase order and an invoice, and our clients can witness significant improvements through the influence of connecting buyers, sellers, and banks on a common decentralized network. Our agenda is to examine and investigate all spaces of trade finance to make our network accessible to all customers and to be capable of providing them with the tools for their several trade finance requirements and needs.”
Contour explained in a statement that it has already established an in-house development team to try different things with these new trade product contributions.
However, how it is going to contribute to Marco Polo, which was initially formed as an open account trade is not clear.
In the present, over 30 banks are part of Marco Polo, making it the largest trade finance network that provides blockchain technology. However, progress has been moderate. The network initially wanted to move into production by mid-2019, and an updated go-live date of Q2 2020 was additionally missed. By Q4 2020 Marco Polo was formally live with two modules: receivables discounting and payment commitments. Earlier, DBS and Standard Chartered launched a blockchain trade finance platform named ‘Trade Finance Registry.’
According to Daniel Cotti, managing director of the center of excellence for banking and trade at TradeIX – the fintech firm that operates Marco Polo, “One of the biggest reasons that it took longer than expected for distributed ledger technology solutions to become standard is the lawful commitment with the banks and the corporates. These complexities are anticipated, especially when we are forming & developing something new and innovative. Since this has been settled, and now we have a major waiting list of banks and companies that want to join.”
He further added that it is not clear to say that Marco Polo covers open accounts and Contour covers letters of credit. “There is an ill-defined situation in the middle, and for us, this situation is the payment commitment module. Our corporate clients tell us that the irrevocable payment commitment (IPC) instrument has the scope to replace some of their discrepancies in the LC business. It is undoubtedly up to the clients to determine if they need a letter of credit, an IPC, or an open account. However, our offerings are a fresh new trade instrument that caters to the functions of a letter of credit and open account. ”
Nonetheless, as a developing scope of ventures, like metals, energy, petrochemicals, textiles, soft commodities, and retail, conduct transactions on Contour, the network shows up now to have focused on ruling the world of blockchain-enabled trade finance.
“With this investment, we move ever-nearer to understand our vision of turning into the new worldwide norm for trade finance by easing & eliminating barriers in the trade ecosystem, making the industry economically, environmentally and socially sustainable,” says Wegner”