Standard Chartered partners with Linklogis on blockchain trade finance platform
Standard Chartered and Chinese startup Linklogis, a supply chain finance technology provider, have unveiled a blockchain joint venture under the brand name Olea. The move is a further step in determining the viability of crypto technology in global trade.
Headquartered in Singapore, Olea is an independent blockchain platform for trade and supply chain finance digitization.
SC’s global head of strategic initiatives Amelia Ng will head the new venture which aims to bring together “institutional investors seeking opportunities in an alternative asset class with businesses requiring supply chain financing.” Ng will be joined by Letitia Chau, vice chairman and chief-risk officer of Linklogis, who will take on the role of Olea’s deputy CEO.
Although those types of trade transactions rely on credit letters for short-term finance, the existing process is largely paper-based and could take up to two weeks for the conventional document exchange. However, the exchange of the electronic documents using blockchain can be completed in a shorter time as the technology is able to digitize and simplify the end-to-end exchange of information between all parties.
“By marrying Standard Chartered’s international trade and risk management expertise and unparalleled knowledge of Asia, Africa and the Middle East with Linklogis’ innovations in supply chain technology, Olea is uniquely positioned to reinvent trade finance and be a force for good,” said Ng in a statement.
Olea’s enterprise blockchain platform will enable businesses in trade finance to streamline operations, while reducing overheads.
Other benefits, according to the international banking group, also include the immediate and simultaneous transfer of assets, settling transactions in real-time, as well as reducing counterparty risks and the capital costs.
“Olea aims to disrupt today’s trade finance model by matching suppliers’ financing needs with alternative liquidity from investors, seeking a compelling asset class linked to the real economy,” the statement further reads.
Back in 2019, Standard Chartered made a strategic investment in Linklogis, which develops blockchain-powered supply chain finance platforms in China. Before that, the lender said it intends to work with the Shenzhen-based startup to help corporations authenticate their commercial documents.
Olea is also expected to bring unique benefits for smaller and medium-sized suppliers who can obtain access to finance with reduced risks.
As with most supply chain investment solutions, the larger enterprise buyers will be the key to onboard their suppliers – who grant the funding – to the platform. In this case, the bank leverages its credit history and understanding of the buyer, and therefore will have greater trust in financing the suppliers.