Standard Chartered has announced that it is working with Siemens Financial Services on blockchain-based bank guarantees that could provide an alternative for letters of credit (L/Cs) for traders in the UAE.

A pilot programme began in March 2018 and will be completed later this year. TradeIX is the solution provider, and the system uses R3's Corda.

Digitised process

"This is an industry-defining solution which we believe will transform the way guarantees are issued and processed in the UAE," according to head of UAE transaction banking at Standard Chartered, Motasim Iqbal.

The solution digitises the entire guarantee process, from creation to amendments and claims handling with the aim of eliminating inefficiencies in paper-based guarantees.

Less documentation

According to the developers, commercial bank guarantees involve less documentation than L/Cs.

This means that they think blockchain-based guarantees will be available before blockchain-based L/Cs.

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