Enterprise Ethereum

komgo Case Study: Blockchain for Commodity Trade Finance

A blockchain-based open platform that is bringing commodity trade finance into the 21st century by optimizing financing processes and accelerating industry operations with digitized transactions and a trusted source of documents to reduce fraud

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Bringing Global Trade Finance into the 21st Century

Backed by 15 of the world’s largest institutions spanning global banks, trading companies, and oil giants, komgo is transforming world-wide trade financing from an antiquated and risk-prone paper-based system to a fully digitized, secure, and frictionless experience via an open blockchain platform in partnership with ConsenSys and Kaleido.

Problem Statement

Rapid globalization has outpaced the trade finance industry’s ability to standardize and digitize its system of record-tracking. The exchange of commodities—each with its own unique regulations, shipping specifications, and certification requirements—is currently managed across different borders and jurisdictions using an ineffective, antiquated paper-based system of record tracking that is often prone to significant issues. Among these issues are fraud, security vulnerabilities, and inefficient payment methods that leave stakeholders waiting for payment for an inordinate amount of time. It has been difficult to make significant technological improvements to trade finance operations for various reasons, including the number of diverse stakeholders located across the globe and the complexity and volume of business transactions. Fractured processes cause billions of dollars worth of annual losses in income and missed opportunities.

komgo seeks to catalyze the world’s commodity trade finance network using Enterprise Ethereum blockchain technology to deliver higher levels of security, trust, and efficiency through automation and industry-tailored functionality.

Enterprise Ethereum Solution

A private, shared blockchain network based on Enterprise Ethereum that serves as a secure, streamlined, and digital platform on which only authorized parties — banks, commodity traders, energy corporates, inspection companies and the broader ecosystem of participants — can store data, exchange transactions, and send messages more efficiently and securely based on permissions. This network enables the secure peer-to-peer exchange of documentary evidence to support Know-Your-Customer (KYC) due diligence and the execution of trade finance transactions.

The komgo platform facilitates significantly increased transparency, while its “privacy by design” architecture permits private peer-to-peer transactions. This design model radically enhances trust and accelerates access to trade finance by reducing operational procedures and lowering the risks of failures and fraud across the industry.

komgo is backed by 15 of the world’s largest commodity trade and finance companies: ABN-AMRO, BNP Paribas, Credit Agricole, Citi, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, SGS, Shell, Societe Generale. By working with ConsenSys Solutions and leveraging Kaleido’s enterprise blockchain solution, komgo was able to quickly implement its vision and successfully deploy its live production network in December 2018.

“The launch of Komgo SA highlights a shared vision for industry innovation and underlines the ongoing commitment among members to build a truly open and more efficient network within commodity trading.”

– Souleima Baddi, CEO of komgo

Goals Achieved

After 2 years of proofs-of-concept and pilots, komgo incorporated in August 2018 and launched its platform four months later on 20 December 2018. komgo is connected to another live Ethereum platform, VAKT, a blockchain based post-trade processing platform for commodities. The first letter of credit was issued on the komgo platform on 21 December 2018—a first for the commodity trade finance industry.

komgo catalyzes the world’s commodity trade network by facilitating a global ecosystem that optimizes physical commodities financing and the acceleration of industry operations. While streamlined operations are estimated to create potential cash-flow gains of 30-40% across the entire production chain, industry-wide adoption of komgo is expected to reduce the cost base between 20-50% with the possibility of further improvement as the project matures. komgo seeks to further expand its product offering in 2019 and will continue to grow its network to hundreds of participants.

Enterprise Ethereum is the foundation for many industry blockchain use cases and case studies. For more ConsenSys banking and finance case studies, check out Project i2i, Project Ubin, and Project Khokha.

Banking, Finance and International Trade Case Study

komgo Case Study

A 12 page report detailing the industry problems addressed, the Enterprise Ethereum solution, and the results achieved by komgo.

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