The government of Dubai has partnered technology giant IBM to launch a blockchain initiative for trade finance.
Announced today, the project could prove telling in its impact with shipments and transactions of goods in one of the world’s major trading hubs. Dubai’s geographical proximity has established the Emirate as a hub for shipments between Asia, the Middle East and Africa.
A number of private companies are involved in the project, given their involvement in trade finance transactions. Dubai’s largest bank Emirates NBD is a part of the project, as is Spanish banking giant Banco Santander. UAE-based telecom provider ‘du’ is also participating, with a background in blockchain technology development through a recent healthcare initiative to store patient records on a blockchain shared between UAE hospitals. Freight forwarded Aramex, a major player in the logistics and shipping industry is also involved in the trade finance test, along with an unidentified international airline carrier.
The initiative will be led Dubai Customs, the official customs authority of the Emirate and Dubai Trade, an e-trade services hub, both of which are agencies of the Dubai government.
IBM Middle East general manager Amr Refaat said in statements:
IBM believes that blockchain will do for transactions what the internet did for information…Our collaboration today with leading Dubai organizations across different sectors in trade finance and transportation will showcase how blockchain will revolutionize the way businesses interact with one another and with their customers and suppliers.
A Blockchain Trade Finance Transaction
IBM provides an example of the trade finance test, which will see participants from India, Dubai and Spain. Stakeholders in this multi-step trade finance transaction will see fruits exported from India to Dubai by sea, with participants receiving real-time updates of the shipment due to Aramex’s involvement. Emirates NBD will issue the letter of credit for the transaction which sees the fruits turn into fruit pulp in Dubai. The juice is then flown as an export from Dubai to Spain, where Banco Santander will act as the bank responding to the letter of credit.
Emirates NBD has notably participated in successful testing of blockchain trade finance transactions, alongside a remittance cross-border transfer with Indian banking giant ICICI last year.
Emirates NBD Group’s chief information officer Ali Sajwani added:
We are excited to participate in the ecosystem on streamlining the trade finance process using the futuristic blockchain technology, which has the potential of transforming the way we conduct business between heterogeneous entities.
Dubai telecom and broadband provider du will provide the telecommunications platform using internet of things (IoT), enabling connectivity to the transaction alongside IBM’s own Watson IoT, powered by smart contracts for device-reported data to update information on the blockchain.
Meanwhile, Dubai’s government-led Fintech agenda is seeing plenty of development in new financial innovations, particularly with blockchain technology.
An early 2016 initiative saw the ‘Global Blockchain Council’ formed in Dubai before promptly laying out a roadmap toward a sweeping digitization drive. By October, the Dubai government announced a comprehensive “Dubai Blockchain Strategy” program. One of the earliest initiatives will see Dubai government executing all of its transactions and record its documents on a blockchain, by the year 2020.
Traditional Dubai port image from Shutterstock.