Commonwealth Bank and Wells Fargo have announced they are testing blockchain for use in trade finance, focusing on the global cotton market.
Working alongside blockchain startup Skuchain and Australian cotton trading firm Brighann Cotton, the two banks facilitated a transaction between a cotton buyer and seller. In statements, Commonwealth said that the test enabled all parties involved "to track a shipment in real time" using a distributed ledger.
Michael Eidel, executive general manager for Commonwealth Cash-flow and Transaction Services office, said in a statement:
"The interplay between blockchain, smart contracts and the Internet of Things is a significant development towards revolutionising trade transactions that could deliver considerable benefits throughout the global supply chain."
In the past year, a number of banks, companies and startups have focused squarely on applications for trade finance. The idea is that a distributed database like a blockchain can form the basis for a wholly digitized supply chain, using the tech's design to ward off potential fraud – something that banks like Wells Fargo and Commonwealth say they'll keep exploring for potential commercial uses.
"This marks another step in evaluating technology that, over time, could support the evolution of trade finance," said Chris Lewis, Wells Fargo's head of of International Trade Services.
Image via Shutterstock
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Skuchain.