Japan's MUFG Bank has successfully completed its first fully digital trade finance transaction through its GIFT City branch in Gujarat, India. It involved a US$15 million letter of credit (L/C) for a subsidiary of Tata International Limited, the global trading arm of the Tata Group.

Utilising the Contour Network Hub now acquired by fintech company Xalts (DC World News, 21 February 2024), MUFG collaborated with Tata International's Singapore treasury centre to digitally negotiate, prepare, apply for, and accept the L/C.

Time-saving

This streamlined process was completed within three hours, a significant improvement over the traditional document-based approach, which typically takes up to two days. The achievement underscores MUFG's commitment to leveraging technology to enhance efficiency in international trade finance.

The bank's collaboration with its technology-oriented partners in this deal also exemplifies its commitment to providing cutting-edge financial solutions, according to MUFG's managing director and head of transaction banking Asia Pacific, Belinda Han.

India's first IFSC

GIFT City, or Gujarat International Finance Tec-City, is India's first International Financial Services Centre (IFSC) and a smart city, designed to be a global financial and IT services hub, offering a business-friendly environment with tax incentives and regulatory benefits to attract global businesses.

MUFG's GIFT City branch, established in 2022, serves as a strategic hub, aligning with India's vision of becoming a global financial centre.

Contour benefits

The Contour Network Hub is a digital trade finance platform that aims to streamline and digitise the trade finance process by connecting global financial institutions and corporate clients on a single, secure network, facilitating real-time data exchange and automation of workflows

It transforms the L/C process by managing the entire end-to-end process in a collaborative workflow, giving buyers and sellers instant access and real-time visibility of the transaction, all on one connected platform.

Contour history

In its first iteration, Contour was started in 2017 by eight major banks but announced its closure and cessation of operations on 30 November 2023, after failing to secure sufficient funding from its bank shareholders.

In 2024, Contour was acquired by Singaporean startup, Xalts. It is backed by investors including Citi Ventures, the venture capital arm of Citigroup; venture capital firm Accel, which has a successful track record of investing in and supporting high-growth and successful startups, and investors with cryptocurrency interests and other fund managers.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.