Natixis, IBM and Trafigura have joined forces to develop a digital blockchain platform aimed specifically at the US crude oil market.
The distributed ledger platform to be established by the three will place buyers, sellers and their banks on the same ledger, giving all parties sight as to the progress of a transaction.
It follows the same model that has been explored by various banks and fintechs who are all trying to use blockchain to reduce costs and speed up the time taken to complete a transaction.
IBM recently teamed up with Maersk to provide a similar distributed ledger platform for the shipping industry.
“Natixis wants to use blockchain to enhance client service by optimizing the antiquated arena of commodity trade finance,” said Arnaud Stevens, Natixis’ New York head of global energy and Commodities.
“The current process is paper and labour intensive, we have multiple friction points with high processing costs and limited automation. Distributed ledger technology brings some much-needed innovation into our industry.”
Access to the ledger will be extended to shipping companies, pipeline operators, inspectors and warehouse operators, which will increase the number of participants in the supply chain who can provide real-time updates.
The ledger will be built on the Linux Foundation open source hyperledger fabric, and will be hosted on IBM's cloud platform, Bluemix.
“Processes in the energy and commodities trade business are ripe for improvement,” said James Wallis, Vice President, blockchain markets and engagements, IBM.
“The approach we are taking, using a permissioned blockchain network built on the hyperledger fabric, has the potential to transform the crude oil industry by creating consistency in trade finance and by digitising transactions and information sharing. Creating this ecosystem for the commodities market working with two world leaders in this industry will help create an entirely new approach to managing the global commodities trade.”