Fast, efficient, secure:
Digital Banking alongside global supply chains
Fraunhofer IML and Commerzbank set up an innovation lab in Dortmund to investigate the use of technologies such as DLT or Blockchain in trade finance. This makes the
international bank the first financial institution to establish a so-called “Enterprise Lab“ at the Fraunhofer Institute for Material Flow and Logistics IML and further expands the cooperation already existing for many years. Senior Advisor Product Management Trade & Supply Chain Finance Gerhard Schipp of Commerzbank explains why this lab is of groundbreaking significance.
The blockchain or distributed ledger technology (DLT) has the potential to change the (financial) world: Transactions can take place without delay, operational trading risks are minimized, manual errors and coordination problems are reduced. In the past, reconciliations between customers and banks had to take place manually or semi-automatically; the blockchain could automate this process in the long term. This does not only serve to increase transparency but can be cost-efficient, too. It will likely ease the secure flow of transactions across the supply chain - making transactions faster while also helping to prevent fraud.
The new “Trade Finance Innovations Lab“ will now work on developing new payment and finance ideas for the trade finance business based on things like for example DLT, smart contracts and the Internet of Things. At the same time, both institutions will work on establishing a general framework and standards for the digitalization of international supply chain management and related financing tools. The solutions jointly developed in the lab will point the way for digital banking alongside the global supply chains of the future.
Sights set on the year 2025
Since the successful collaboration with Fraunhofer IML began more than two years ago, potential practical applications for the trade finance business have been identified and prioritized in consultation with corporate clients of the bank. Processes alongside physical supply chains can be linked much more closely to the financial supply chain using new technologies. Together with the scientists new business models in trade finance were developed in the “Financial Supply Chain Management 4.0“ project and the influence of the physical supply chain on the financial supply chain up to the year 2025 was investigated. The requirements identified in Design Thinking Workshops with Commerzbank customers are to be incorporated into the development of block-chain-based solutions. The new Enterprise Lab provides exactly the right framework for Commerzbank to step up our collaboration, which has been a success to date.
Commerzbank is already involved in various cross-industry initiatives looking at applications of distributed ledger technology (DLT). For example, the bank joined the Marco Polo initiative, supported by R3 and TradeIX. The project could help revolutionize the handling of international trade transactions by providing risk mitigation and financing along the supply chains of trading clients. Commerzbank also transacted via the IBM-supported Batavia platform, helping their client Audi to export cars from Germany to Spain. Through these initiatives, the company has gained crucial insight into how the trade finance ecosystem can continue its transformation – Know-how that will receive a new quality through the cooperation with Fraunhofer IML.
ABOUT THE AUTHOR
Gerhard Schipp is Senior Advisor Product Management Trade & Supply Chain Finance at Commerzbank. The internationally operating commercial bank with around 49,300 employees and locations in almost 50 countries handles around 30 percent of Germany's foreign trade and is the market leader in German corporate customer business.
MORE ABOUT THE TOPIC
Eleven Enterprise Labs already in place
The Enterprise Labs at the Fraunhofer Institute for Material Flow and Logistics provide a facility for companies and scientists to actively work together putting German innovations into practice. The focus is on finding a common path from developing an idea all the way through to your market-ready business case. The symbiosis of theory and practice enables the implementation of ideas that are geared directly at the customer’s business processes. Companies do not simply purchase innovative concepts and technologies; these are developed together. With this facility the Fraunhofer IML has created the ideal conditions for versatile and interdisciplinary research directly with the customer in Dortmund. Their direct involvement in the development process allows companies firsthand participation in the design of the lab. In addition to European Pallet Association e.V. (EPAL), Deutsche Telekom, Dachser SE, Rhenus SE & Co. KG, Boehringer-Ingelheim, BMW Group, DB Schenker AG, Audi AG, Würth Group and Sick AG. Commerzbank is already the eleventh company that decided for this innovative form of joint research between industry and science.
Information on the individual labs can be found here.
From the blockchain lab
The position paper “Blockchain and Smart Contracts. Technologies, research issues and applications“ of the Fraunhofer Gesellschaft analyzes the blockchain technology from the scientific and application-oriented point of view of the Fraunhofer Gesellschaft. It was developed together with the Fraunhofer Institute for Material Flow and Logistics IML.
It can be downloaded here.