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Anglo-Gulf Trade bank uses blockchain to improve transaction speed

Anglo-Gulf Trade bank uses blockchain to improve transaction speed

The joint UAE/UK startup Anglo-Gulf Trade Bank (AGTB) has announced that it is turning to blockchain in a bid to speed up its financial transactions.

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By Noah L. Wilson 18.10.2018

The joint UAE/UK startup Anglo-Gulf Trade Bank (AGTB) has announced that it is turning to blockchain in a bid to speed up its financial transactions. It is one of a growing number of worldwide financial institutions to use the emerging technology. 

AGTB’s headquarters are in Abu Dhabi, and it connects clients in Asia, the Middle East and the UK with trade facilities. It started with initial capital funding of $100m.

Chairman Jeremy Parrish said this week that it is time for banks to start using the best and most appropriate technologies available to enable them to start addressing shortfalls.

There has been a concerted push this year to try and use blockchain to address delays in the financing supply chain, and the transparency and speed that it allows will hopefully usher in a new era of efficiency in trades and financial payments.

Parrish said that AGTB’s aim of digitizing its service came from “a gap in the market, a gap between demand in trade finance and the supply chain.”

According to the Asia Development Bank, a black hole currently exists when it comes to trade financing, with a gap of around $1.5tn. Much of this is due to archaic payment systems that are more likely to stifle emerging markets and smaller businesses than established institutions that have sufficient liquidity to weather any storm.

AGTB is awaiting final regulatory approval from the relevant authorities before launching officially early in 2019.

Blockchain was originally set up to help underpin the purchase and transfer of cryptocurrencies such as Bitcoin, but it has developed further to become a recognized tool in its own right and part of major worldwide supply chains. Showing data as one long transaction helps pinpoint where efforts are stalling and makes it easier to tackle any problems.

Many positive aspects should arise from blockchain being involved in major financial processes, not least the removal of excessive amounts of paperwork. As the process is completely transparent, it should also significantly assist in tackling fraud.

One of the first places that global banks are starting to use the technology is in the commodities sector. With current worldwide wheat and other crops in a state of flux, the sector is one of the first to test digital processing. Oil commodities are also part of this project, which should commence before the end of 2018.

Earlier this year, a collaboration between HSBC, Standard Chartered and Hong Kong’s financial regulator launched a trade financing platform based on blockchain, and many more developments should occur next year as the idea snowballs.

However, analysts still believe that mass blockchain adoption is some way off, and many investors and financial institutions are waiting to see how the first projects progress before committing themselves to any concrete investment through this mechanism.

A relative blockchain critical mass that will see the technology used as a standard method of transfer may take a while. Other concerning points at present include whether there needs to be a standardization of some customs and requirements, particularly around shipping.

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