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Seven of Europe’s largest banks hired IBM to build a blockchain trade finance platform for small businesses to finance their cross-border orders in the region.

This highlights how many banks and bankers see trade finance as an area with the greatest potential to benefit from blockchain technology. IBM will build and host a new blockchain system for providing small and medium sized businesses with cross-border trade finance from IBOS member banks KBC, UniCredit and HSBC, along with Deutsche Bank, Natixis, Rabobank and Société Générale.

Blockchains allow encrypted data on anything, from money to medical records, to be shared between companies, people and institutions. This protects data from fraud, while instantly updating all parties concerned. Bankers expect the technology to transform trade finance.

Rudi Peeters, Chief Information Officer at KBC, commented:

“We are convinced that blockchain will have a huge impact on banks in the future and that trade finance is one of the biggest areas of potential for the technology.”

KBC developed the precursor to the new system by trialing it with some of its Belgian small business customers. The plan is for the banks to start offering trade finance to European SMEs over the cloud-based platform by the end of this year.

Read the full article in the Financial Times, behind a paywall, here.