Product Review: #dltledgers – cross border trade finance platform

COVID-19, the most dreaded pandemic of modern times has not only severely disrupted global trade and the world economy but has also exposed the vulnerability of global trade and international supply chains..

COVID-19 has left global businesses and supply chains scrambling to re-examine and re-engineer their current operational models most of which is paper-driven supply chain models putting global supply chains and businesses under pressure like never before..

As per WTO data, world merchandise trade volume and real GDP fell sharply in the first half of 2020 as a result of the COVID-19 pandemic before rebounding in the second half.. The value of global trade in goods and services is forecast to reach US$ 6..6 trillion in Q2 2021, which is an increase of about 16% compared to the lowest point of 2020..

On the positive side though, the decline in merchandise trade in 2020 was less severe than forecasters predicted mainly due to proactive fiscal and monetary policies that boosted incomes and consumption, an increase in demand for technological innovation to facilitate remote work, and trade policy restraint that kept supply chains functioning..

Fintech, defined as computer software and other technologies used to support, improve, and automate banking and financial services, has a huge impact on supply chain and plays a significant role in the field of trade finance adding value to various stakeholders in the chain..

 

SaaS based Fintech solutions

The uptrend in adoption of SaaS (Software as a Service) based solutions and increase in new launches are sure-signs of it being one of the fastest-growing segments in the IT industry today.. SaaS solutions are becoming more flexible, affordable systems with intuitive user interface, and pandemic has accelerated the need for SaaS solutions with more people working remotely..

The business outlook for SaaS is seemingly the brightest among all cloud options in the market today.. The users of SaaS products has increased rapidly in recent years.. Though initially positioned as an SME (Small and Medium Enterprises) offering, today large enterprises and corporates are finding SaaS an affordable solution that provides agility, operational resilience, and digital transformation..

Following this trend is #dltledgers, a Singapore headquartered, software company specializing in SaaS solution offerings including digital tools and applications underpinned by innovative technologies such as Blockchain, Artificial Intelligence and Machine Learning..

#dltledgers claims to be the world leader in business blockchain solutions as an independent service provider using their inter-enterprise digitisation to enable enterprises to build their digital private network with their external ecosystem and the world’s fastest growing cross border trade finance platform.. Their uniqueness seems to be in the segment in which they operate which is the inter-enterprise digitisation space..

Inter-enterprise digitisation space

Earlier versions of digital transformation was largely driven by enterprise-wide change driven by digital technologies and integration of transformation processes into every business aspect of the organization.. Today the scope expands externally to multiple ecosystems with which organizations interact on a day-to-day basis as part of its business operations..

This is the inter-enterprise space and transformation is supported by actions encompassing multiple dimensions, from the development of digital competencies in the external ecosystem (banking, logistics, certifying bodies, surveyors, insurance etc..) to ensuring a sound and reliable technology infrastructure to create and implement innovative solutions..

Technology innovations

Business blockchain or Enterprise blockchain is at the forefront of the next wave of digitisation especially in the inter-enterprise digitisation space.. It removes disparities and struggles that many organizations face in their transformation initiatives..

The COVID-19 pandemic has revealed the relatively high-level relevance of digital performance and need for digital competitiveness in a largely connected world.. Today it is helping companies to drive innovation, reduce cost and expand market presence..

With the e-business technology adoption booming during this period, execution software that connect to the external ecosystem and building digital networks are gaining tremendous momentum..

A primary barrier to implementation of these digital solutions is a lack of knowledge about digital opportunities and technical know-how.. Knowledge gap is a lack of awareness of the solutions available and the potential benefits.. The rapid pace of change in digital technologies has made it difficult for many companies to decide in which innovative field to invest, when to invest, and up to what level of investment..

More often, companies are working with a budgeting logic instead of an investment logic.. Digitisation is considered as a cost factor and not seen as an opportunity.. Very few companies know how to translate the use of technologies into economic impact, and how to build a new incremental business model out of the investment..

As part of my Product Review series, here is an in-depth look into the #dltledgers platform to understand the use of blockchain based enterprise solutions and how these products/services can potentially benefit organizations and help drive digital transformation..

The #dltledgers platform

#dltledgers platform is a digital platform underpinned by blockchain to run digital networks for post-trade execution using a coherent and holistic approach to build a private digital network for a Corporate or Enterprise to connect their ecosystem partners..

It is a cloud-based software, offered as SaaS (Software as a Service) with an annual subscription fee and is accessible through a web browser. The users can access data using their credentials (Authorized user ID and Password) from any internet-enabled device (Mobile, internet or laptop/PC). The solution is hosted on Microsoft Azure cloud and has the enterprise grade infrastructure to support the application..

The key elements of the blockchain based system are:

• Distributed ledger technology: All participants have access to the distributed ledger on permissioned basis.. With shared ledger the transactions are recorded only once and eliminates duplication of efforts that is typical to traditional business networks..
• Immutable ledger/records: No participants can tamper with the records once recorded on the shared ledger and it’s an append-only function which means if a transaction records an error, the new transaction is entered to reverse the error but both transaction records will be visible..
• Smart Contracts: A set of rules involving business logic forms a smart contract to be executed between participants (Buyer/seller) and it gets stored on the blockchain and gets executed automatically.. The details are hard coded in system..

The #dltledgers blockchain solution comes with below characteristics

• Data visibility
• Data management
• Process optimisation
• Finality (mitigates problems in version control of excel spreadsheets used as part of business processes)
• Immutability (tamper-proof storage)
• Traceability (origination at source and provenance)
• Consensus (authentication and verification process)
• Cryptography (sign off by a node participant using private key which uniquely identifies a transaction/data)

All these add up to bring the aura of business blockchain to the mainstream in order to meet the challenges faced by enterprise in its digital transformation journey..

Access Control

The main controller of the access is the Corporate or Enterprise who is assigned the title Subscriber Owner.. The subscriber owner controls the accesses of their network partners on the #dltledgers platform to run the Smart Contract..

The network participants may include but not limited to various partners from the Corporate’s ecosystem such as the supplier base, customer base, banks, insurance co., logistics service providers, certifying bodies and other relevant bodies..

These partners are identified as local and global business partners in the network based on the certificate of entitlement (defined roles) and activities are assigned to them by the subscriber owner, as part of the onboarding process, to enunciate the blockchain operations..

In this business network involving a shared ledger, anything of value can be tracked and traded reducing risk, cutting cost and saving time.. The data and documents are stored on an immutable ledger as tamper-proof records and can be accessed only by permissioned network members..

Smart contracts, by definition, are programs stored on a blockchain that runs upon meeting pre-determined conditions.  It is primarily used to automate the execution of an agreement in order for all participants to be immediately certain of the outcome, without any time lag or involvement by intermediaries. It also enables workflow automation and triggers next action upon meeting the conditions.

Configuration

The configuration of the platform seems easy with the Configuration Wizard which helps users to track the steps to set up the Global Master Data of the Subscriber on the platform..

This configuration covers Business Partners, Product List, Operations, Bank Account details, Term & Conditions, and other configurations on alerts/notifications, emails and other systems..

A pop up window gives the status of the platform configuration wizard.. With data comes insights and capabilities to make informed decisions and to enhance the flexibility of the platform, #dltledgers provide multiple capabilities including graphical dashboards that aggregate the information of the digital transformation allowing users to generate various business reports..

Subscribers can create user groups if they have a large number of users from their participants.. The subscriber can also assign rights to multiple team members who can simultaneously do the relevant tasks and also substitute when one person is not available..

 

#dltledgers Data Capabilities

Another key feature of the platform is the capability to add the comprehensive product list of all products and services offered by the organisation.. This content is stored for future use in executing the smart contract. This feature captures all the details including the relevant characteristics that can be customised for the organisation’s requirements and a search function as well..

This feature is also caters for category and brand wise listing to support the organisation’s tracking of trade transactions brand-wise and category-wise.. The configuration of the same is a part of the delivery and implementation process..

The audit log feature provides the subscriber with a reliable record of the users that have worked on each operation, thus improving accountability and traceability within organizations..

The advanced auditability provides details of not just the user and their activities with date and time stamp, it also provides unique transaction ID and the related transaction activity details and data/doc exchanges made at any given point in time..

#dltledgers Blockchain Module

This module is designed to manage the various partners in the ecosystem and their roles in the digital transfer of assets in cross-border trade.. The various operations and roles for cross-border trade transactions allow for automated and continuous repeat trade cycles..

Using this module, a trader can quickly & easily onboard his value chain participants such as trading partners, banks, carriers, buyers, sellers, brokers, surveyors. After the onboarding the trader can assign roles, build, and automate processes and contracts pertaining to their trade flow..

#dltledgers blockchain system is a secure single window channel for the Subscriber Owner to reach out to its network of banks to facilitate their financing requirements based on the facilities already set on Pre-shipment and Post-shipment to run their Documentary Credit and Open account transactions, be it Letters of Credit, Account Payable Finance, Account Receivable Finance, and/or Telegraphic Transfer..

#dltledgers platform also provides real-time track and trace activities of all the business partners.. This helps with traceability, chain of custody and auditability of the transactions executed digitally in blockchain network..

 

Blockchain Operations

Multiple blockchain operations are all pre-defined in the system and hard coded with certificate of entitlement assigned to various roles. This helps with configuration of the workflow and its automation.. The validation and verification of the operations are defined with the respective participants and approvals are taken using the consensus mechanism (creating of crypto hash) and digital signature..

Custom operations are permitted and the flexibility of creating and configuring the workflow is a unique feature of the #dltledgers platform and new operations can be easily customized and added..

Global trade transaction involves various terms, conditions and requirements such as choosing the right Incoterms®, Tax terms, Payment terms, Insurance terms and other documentary requirements.. All these can be captured as part of the Global Master Data in the system..

Some of the trade operations may need an output that needs to be shared outside the chain but the system has the flexibility to configure this and trigger communication from the specific user’s email.. The execution of a smart contract on the platform involves the creation of a deal..

Once a deal is confirmed by the parties involved, the execution of the Smart contract beings, followed by the managed deal process which governs the process configuration and enunciation of the blockchain operations in the network.. Deals can be deleted before enabling the blockchain network and details gets stored in the system..

Multi-party Trade Consensus

The platform supports multi-party trade consensus.. This means that business partners can digitally consent to the documents/data, upload documents and formally verify a set of trade documents, which are originated by other participants and requested for authentication and validations..

This verification process is supported by digital signatures and can be interfaced with many digital signature providers.. The activity of consensus process firms up the successful execution of the contract with data and documents in shared ledger verified, validated, and consented in blockchain..The #dltledgers platform also helps with improving the communication efficiency and document exchange with Logistics service providers be it 3PL/4PL providers.. The logistics module provides capabilities to engage with logistics service providers digitally by enterprises..

Based on the shipment mode (Air, Ocean and Land), freight request can be placed with multiple logistics service providers via the network and will be a single window to access multiple such providers.. They can obtain quotes and share blockchain verified documents via the system to provide authenticity of Shipping Instructions, Booking confirmations, Ship Certificates, Bill of Lading, Air Way Bill, Road Transport documents and more..

 

Digital File Cabinet

Every contract created on the platform is stored in a highly secured vault known as Digital File Cabinet (DFC) which is a very useful feature to have as it allows different business partners involved in trade to upload trade associated documents and provide permissioned access to the business partners..

Digital File Cabinet (DFC) enables the creation, storage, exchange, and transmission of paperless digital documents which can be accessed only by stakeholder who have access to DFC..

The DFC is unique to each party in the chain allowing each of them to create immutable documents that are encrypted end-to-end based on multi-party consensus ensuring privacy, ease of consent for digital authenticity, certified data ownership with multi-party consensus and tamper-proof exchange..

All shipment details are captured in the system with options to execute the shipment in multiple lots or as a single lot shipment.. It covers all shipment terms and respective shipment documents referenced are digitally stored securely in separate digital folders.. Multi-modal shipments and their related activities can be captured and executed in the platform..

In addition to the storage, #dltledgers also provides document generation capabilities.. All finance and billing documents such as Draft LC, Purchase Order, Pro Forma Invoice, Commercial Invoice, Packing List can be generated by the system..

Electronic Bill of Lading

A Bill of Lading (B/L) is one of the most important commercial documents in the whole shipping and freight chain fulfilling 3 functions..

1. Evidence of contract of carriage
2. Receipt of Goods
3. Document of title to the goods

Traditionally (and even currently), the bill of lading, especially a negotiable one is issued as a physical paper document signed and stamped by the carrier, with a set number of originals..

An electronic bill of lading (e-BL) is a paperless bill of lading that is issued electronically said to fulfill the above functions in the same manner as a traditional paper bill of lading..

Many believe that the electronic bill of lading will be a game changer in the shipping industry with its faster, efficient transactions, reduction in costs with greater security and less risk..

The #dltledgers platform has an impressive e-BL functionality which can interface with various providers and enablers of e-BL facilitating inter-operability with other applications..

Stakeholders are able to issue, authenticate and transfer electronic Bills of Lading from third party solution providers such as Essdocs, Bolero, Wave and TradeLens and connect with the #dltledgers platform via integrated APIs which ensures transparency.

The e-BL module is integrated with Trade Trust for digital issuance, authentication, endorsement, title transfer, and all documents are stored securely in a DFC..

Summary

The #dltledgers platform is a wholly integrated solution but it also offers individual and direct solutions for various stakeholders such as Traders, Large Enterprises, Banks and Financial Institutions, BCOs, LSPs, Carriers and Ports..

While there was a lot to understand and review in the #dltledgers platform, there were a few factors that stood out for me..

• Complete visibility into the value chain giving all stakeholders the ability and transparency to efficiently track all the trade flows in real-time on a single dashboard
• Universal mapping of various activities such as documentation, contracts, procurement, and financing from beginning to end
• Traceability and accountability that assists the customer in reducing errors, miscommunication, and risk of fraud at each stage
• Serious access control which is a main if not the main requirement of any digital platform involved in supply chain and cross-border financing
• Simplicity of its usage providing a simple, straightforward and uncomplicated UX

There is a paradigm shift in the activities when it comes to leveraging newer technologies for digital transformation, but #dltledgers solution seems to be aimed at making it simple for any organization from a user standpoint to adopt the digital framework with ease..

The digital transition is happening now and at a fast pace..

For companies to remain competitive, they must embrace digital transformation to drive productivity, maximise utilisation of their assets, support new business models, support process and product innovation like visibility and traceability of products..

All this and more is made possible via #dltledgers digital offerings..

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