The year 2024 is expected to be a pivotal point in the evolution of technology, including in applications related to letters of credit (L/Cs) and other aspects trade finance as well as anti-money laundering compliance according to a senior manager at IT and technology consultancy, Capgemini.

But in a year that saw the failure of what seemed like one of the most promising blockchain L/C initiatives, Contour, Vivek Dubey's analysis may be rather too optimistic in its timescales.

Blockchain by next year

Dubey says that while they still in their early stages, blockchain and distributed ledger technology (DLT) have the potential to revolutionise various aspects of financial services, and next year will see further experimentation and adoption of these technologies in various use cases.

Blockchain-based trade finance platforms will streamline the process of issuing and managing L/Cs, reducing costs and improving efficiency, he says.

Over optimistic?

While many agree that digital L/C solutions will be found, a string of failures of several fintech initiatives in the trade finance sector culminated in October when it was revealed that the Contour blockchain network would be shuttered (DC World News, 31 October 2023).

Other recently collapsed trade finance platforms that have been unable to sustain themselves include we.trade, whose significant assets where acquired by Contour in 2022 (DC World News, 14 September 2022); Marco Polo, in which ING, BNP Paribas and SMBC had significant stakes, and the IBM-Maersk blockchain effort, TradeLens (DC World News, 31 October 2022).

These failures perhaps make Dubey's suggestion that blockchain-based L/C systems will be adopted as early as 2024 rather ambitious, although his observation that experimentation of blockchain and DLT technologies in trade finance will continue next year seems well founded.

Vivek Dubey's analysis published in a blog on the Finextra web site, Top Technology Trends in Banking and Fintech for 2024, can be found here.

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