Banks in Singapore have reportedly pioneered a first-of-its-kind solution to enhance the security of trade invoice financing.
Reports by FTSE Global Markets published Thursday (Dec. 17) said Standard Chartered Bank, DBS Bank and Infocomm Development Authority of Singapore have collaborated and completed their proof of concept surrounding an application that uses distributed ledger technology to heighten security and reduce risk of invoice and trade financing for banks.
Reports said that while trade finance traditionally requires paper-based processes, distributed ledger technology can now digitize the process, while simultaneously improving transparency by authenticating records.
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The app provides a mechanism that digitizes invoices into digital assets on a distributed ledger, reports said. Doing so means companies and banks can have a single portal through which players can view invoices and statuses that are up for financing.
The distributed ledger technology also cuts the chance that an invoice will see duplicate financing from different banks, while third parties can also view the invoices to verify their authenticity.
According to Jacqueline Loh, deputy managing director of development and international at the FinTech and innovation group at the Monetary Authority of Singapore, the nation is strategically positioned to pioneer trade finance security innovations because it serves as a global trade and invoice finance center.
“This POC [proof of concept] demonstrates the innovative spirit of Singapore’s Smart Financial Center to leverage distributed ledger technology to support economic trade, which is the lifeblood of Asia’s economy,” she said.
Reports said in the next phase of this project, its developers will be looking to include the participation of new parties, including government agencies, to fuel commercial adoption of the solution.