• A revolutionary way to conduct business…
On Sept. 7, 2016, Barclays facilitated a $100,000 trade of cheese and butter between Irish food company Ornua and the Seychelles Trading Company.
This small trade will be just as revolutionary as the first email sent.
Here’s why…
When two companies in different countries want to buy and sell from each other, they use a bank to guarantee the transaction… It’s called “trade finance.”
According to McKinsey & Co., about $2 trillion is conducted in trade finance each year.
For more than 400 years, trade finance hasn’t changed much. Banks act as intermediaries between trading partners. They use letters of credit to guarantee that everyone gets paid. Part of the due diligence process has always involved collecting a mass of paperwork.
Both sides have to prove that they truly own what they say they own. They also have to prove that the goods they are selling are of the size, quality, and quantity that the bank is guaranteeing.
As you can imagine, trade finance involves sending mounds of paperwork across oceans. Missing a signature? Sorry, please resend the package. It’s a time-consuming process desperately in need of change.
Even in today’s digital age, it takes 10 days on average just to handle the paperwork. Sometimes, it can take up to a month.
But all of that just changed on Sept. 7.
That $100,000 trade for butter and cheese was concluded in less than four hours. That’s a huge time-saver that will significantly reduce the price of international trade.
Here’s how the deal was done…
Barclays Bank used a new technology called the blockchain to transact the trade.
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