“This is fantastically exciting. This technology has great potential to make the paper-based processes in Trade Finance more efficient and should also be applicable in many other situations for secure data sharing between companies,” says Paula da Silva, head of Transaction Services.
The use-case that has been tested is about handling Letter of Credit (L/C) which is the form of guaranteed payment by a bank used in international trade that allows the seller to ensure that they will get paid by the buyer. This is done by issuing a L/C which involves both the seller’s and the buyer’s banks.
Collaboration started in the summer of 2020 and implementation began just before Christmas. In the prototype the document exchange between Wärtsilä and SEB, which is normally done by mailing PDF documents between the parties, has instead been done by exchanging structured data sets.
“The prototype was evaluated in January and the result is ground-breaking,” says Harri Rantanen, business developer in Transaction Services.
“Although this proof of concept focused on a small part of the letter of credit process, we have confirmed that you can go simply and securely from document exchange to data interchange on a platform that works independently of the systems and processes used by the parties involved,” he says.
The proof-of-concept has been carried out on the IHAN platform, a testbed and toolbox for fair data economy developed by technology company Digital Living International in collaboration with the Finnish innovation fund Sitra and cybersecurity company Nixu. This means that all integration is built on open standards and APIs, which allowed the solution to be rapidly developed and implemented.
“I have worked for 13 years at a bank and before that 15 years with software development, but I have never previously felt so enthusiastic and seen such great opportunities,” says Harri Rantanen.
The big threshold for this type of data exchange is companies’ fear of sharing key operational data without having control over who can access it and how it is used. Companies are scared of sharing their business-critical data even with their banks.
“The platform we are using does not store any data and is built on secure communication between the parties. By issuing digital mandates, companies have full control over who can access data and how it can be used. So, this removes a key obstacle for future automation,” says Harri Rantanen.
But SEB is also involved in building Contour, a blockchain based platform to make Trade Finance more efficient. How does that fit?
“This can work as a link to scale up the use of Contour. Together with them we will investigate the possibility to use the toolbox we developed for the prototype to simplify integration of new customers and structured L/C data with Contour. It communicates with standard APIs and can easily be linked to many business systems.”
What happens next?
“We have finished the prototype and will now publish the result. The models and tools that we have developed are available and can also be used for areas other than Trade Finance. At SEB we are going to analyse conceivable next steps and the same is true for all parties in the collaboration.”
Press release from Wärtsilä