6 min read
The Marco Polo Network is now generally available on Azure to help both trade banks and corporations take advantage the R3 Corda distributed ledger to better facilitate global trade in this ever-changing world. Regardless of what headlines will lead you to believe, international trade is the lifeblood of the modern global economy. Each year, hundreds of trillions of dollars in goods, assets, credit, and money change hands to keep the engine of global trade running. When a multinational corporation (acting as a seller or exporter) sends goods to their customers (acting as buyers or importers,) the corporation often doesn’t receive payment for 30-90 days. This problem can be exacerbated by variables such as tariffs or new customs duties. To manage cash flow while waiting for payment, sellers often resort to taking out short-term loans from trade banks. But trade banks find it difficult to keep pace having to rely on aging systems and siloed data that increases cost and process friction for all involved.
The disadvantages of disconnected trade
If global trade is an engine, financing is the fuel. But many trade banks rely on decades-old, paper-based processes that slow trade flow and add complexity, with antiquated financing tools that make onboarding expensive, reconciliation cumbersome, and the customer experience poor.
Furthermore, as global providers of trade and supply chain finance, trade banks must manage transactions between sellers and buyers while navigating increasingly complex regulatory processes pronounced by national boundaries. Due to these global regulations, banks can be forced to use different financing platforms for each geolocation, leading to an overabundance of disconnected management tools.
Without a network to exchange data and a platform for viewing and managing transactions, banks have tremendous difficulty processing and executing their clients trade and supply chain financing transactions. At the same time, buyers and sellers can lack awareness of their own financial health due to paper-based trade contracts which aren’t immediately understood across the organization. Furthermore, many small- and medium-sized import and export businesses are unable to scale due to staggering overhead costs.
A cloud-based network to streamline global trade
To improve efficiency in global trade finance, technology firms Trade IX and R3 partnered together with leading banks to create the Marco Polo Network. Launched in 2017, Marco Polo provides a digital, distributed technology platform that allows trading parties to automate and streamline their trade and supply chain finance activities. Applications are built and deployed on top of the platform that allow banks and corporations to perform specific product and trade orchestrations. Trading parties – buyers, sellers, logistics providers, insurers, banks, and other key stakeholders- are able to exchange trade data and assets securely, in real time, and peer to peer using an open and distributed network powered by Corda. Importantly, the network and platform are open – meaning third-parties can build, develop, and deploy their own solutions on the network and platform.
The Marco Polo Network, a platform built by TradeIX using 18 distinct Azure services and R3’s Corda distributed ledger technology, is revolutionizing trade finance. TradeIX packaged Corda and the Marco Polo Network application stack, or node, for deployment using Azure Container Instances and the Azure Container Registry. This gave participating banks and corporations the flexibility to pursue one of two different hosting options; run a Marco Polo node inside of the TradeIX Azure tenant or pull down the application binaries as Docker images from an Azure Container Registry where they could then be deployed within the bank’s Azure tenant. The result is a transformational technology and distributed platform that enables the world’s leading trade banks and their corporate clients to exchange data in real-time resulting in streamlined, automated business activities that increase efficiency and transparency for receivables financing and cash flow management. TradeIX built these exciting new collaboration capabilities into the Marco Polo Network using an innovative, integrated application stack comprised of Corda, Azure SQL Database, CosmosDB and Microsoft Dynamics 365 technologies.
One of the more novel features of the Marco Polo Network is the use of the R3 Corda distributed ledger to ensure that all of the counterparties involved in a financing request have a secure medium by which they can securely and seamlessly exchange trade data, contracts, and financial assets that are critical to completing a supply chain finance transaction. By hosting this platform in the cloud, TradeIX delivers an improved customer experience by providing a single infrastructure for banks and clients to manage their transactions—regardless of geolocation, currency, type of transaction, and industry. Because it’s an open, cloud-native network, Marco Polo Network members can share best practices, run pilot programs, and adjust the platform to meet their specific needs. However, this openness should not come at the expense of the security and compliance fundamentals required by the world’s leading banks and corporations. Microsoft and TradeIX implemented a host of Azure security controls such as Log Analytics, Security Center, Application Gateway, and DDOS Protection to ensure that the Marco Polo Network would be well-positioned to maintain the highest levels of trust, transparency, standards conformance for all members across the network.
In the near future, the Marco Polo Network will also provide corporate treasurers with an ERP-embedded Marco Polo App supported by Dynamics 365, that allows companies to manage their trade finance directly within their own ERP system. The TradeIX – Dynamics 365 interface enables corporations to submit requests for finance directly to their trade bank of choice where it will be automatically acknowledged, received, and processed by the bank’s Corda instance resulting in a free exchange of data without the need for manual reconciliation.
Reducing expenses, improving revenue
An important objective of the Marco Polo Network is to obtain all trade data necessary for a transaction as directly as possible, from the original data source. This also includes external third parties such as logistic providers. Imagine a scenario where two companies (a buyer and a seller) and their corresponding banks, exchange order and delivery data via the Marco Polo Network. Payment terms would then be secured by an irrevocable payment commitment, triggered through automated matching of trade data. This would then be followed by an automatic matching of trade data achieved with involvement of the executing logistics provider, which enters the relevant transport details directly into the network. The ability for the third-party logistics provider to automatically trigger a payment from buyer to supplier following goods delivery with data reconciliation flowing across multiple banks simultaneously demonstrates the real-world value of the Marco Polo Network.
A growing network, built with business in mind
Because the Marco Polo Network is governed by member banks, the model promotes an atmosphere of collaboration across the global trade industry. This formalized governance framework has helped the Marco Polo Network onboard trade banks and corporations across Africa, Asia, Europe, the Middle East, as well as North and South America. Companies of all sizes will benefit from better visibility into trading relationships and easier access to financing options, beyond point to point relationships, to a global network of trading parties.
“I’m very pleased to see Microsoft’s Azure team is pushing the boundaries of banking and technology innovation with their partnership with the Marco Polo Network built by TradeIX. These 2 solutions coupled with Corda creates a very compelling and modern proposition for any smart business looking to take advantage of the benefits that distributed architecture offers.” – Andrew Speers, Director, Product and Innovation at NatWest and Board Director at the Corda Network Foundation.
“International trade is indeed the lifeblood of the economy, which is why R3 is so proud to be a part of the Marco Polo Network. Together, Corda and Microsoft Azure are enabling TradeIX’s mission to transform trade finance, by bringing much needed efficiencies to this market, which holds hidden treasure in the hunt for high yields. We are honored to be part of the ecosystem that will build trade finance solutions on blockchain, and are excited to see what’s next” – Ricardo Correia, Head of Partners at R3.
“It is exciting to be part of the growing ecosystem building trade finance solutions on blockchain. Microsoft is honoured to be providing our global scale cloud as a foundation to R3 and TradeIX to speed this solution to market,” – Michael Glaros, Azure Blockchain Engineering, Microsoft.
“One of the founding technology decisions that were made for the Marco Polo Network was to use the infrastructure provided by Microsoft Azure. We firmly believe that our partnership with Microsoft provides Marco Polo members with the best infrastructure and highest security and transparency standards combined with improved customer experience.” Oliver Belin CMO, TradeIX.