Treasury Today Country Profiles in association with Citi

Ornua

One to Watch Highly Commended: Ornua Co-operative Ltd

Divyesh Modi, Barclays and David O’Rourke, Ornua Co-operative Ltd

This relates to a pilot transaction in September 2016; a letter of credit which guaranteed the export of €110k worth of dairy products from Ireland to the Seychelles using distributed ledger/ blockchain technology.

Photo of Divyesh Modi, Barclays and David O’Rourke, Ornua Co-operative Ltd.

David O’Rourke

Group Trade Finance Manager

View biography

Ornua is an agri-food commercial co-operative which markets and sells dairy products on behalf of their members, Ireland’s dairy processors and Irish dairy farmers. Headquartered in Dublin, they employ some 3,000 people globally and are responsible for circa 60% of Ireland’s dairy exports to over 100 countries, with annualised sales of over €1.7bn.

in partnership with

Distributed ledger technology pilot in UK, Ireland and the Seychelles is one to watch

The challenge

Trade finance, and some documentary trade products in particular, involve a large number of labour and documentation intensive steps which result in lengthy processes, high costs and incremental risks for the parties involved in such trade transactions.

These inefficiencies are well known within the industry and there have been numerous attempts to encourage wider adoption of dematerialised/electronic documents in trade finance, with limited success so far.

The solution

Barclays partnered with Wave, one of 11 companies that went through the Barclays Accelerator programme (New York 2015). The company aims to reduce the costs associated with supply chain management through the use and transfer of title of an electronic bill of lading and ancillary documents by digitally transferring it across the network using DLT/blockchain technology.

Blockchain is a decentralised, distributed, peer-to-peer network allowing all parties in the trade transaction to have much better visibility over an asset and enables an electronic transfer of ownership. The technology enables the records of disparate parties to be synchronised and an asset to be transferred from one party to another while reducing the number of steps in the transaction, alongside other benefits.

“Winning an Adam Smith award is a great honour for both me and Ornua. It is a great recognition of Ornua’s commitment to innovate in the Trade Finance area, and have it endorsed by global peers and experts in the industry.”

David O’Rourke, Group Trade Finance Manager at Ornua explains, “The pilot transaction, in September 2016, was a letter of credit which guaranteed the export of €110,000 worth of dairy products from Ireland to the Seychelles. All the parties involved in the letter of credit transaction were able to electronically transfer the bill of lading and ancillary documents using distributed ledger technology, reducing process time from circa ten days to a few hours.”

Best practice and innovation

Barclays is at the forefront of promoting blockchain across the industry through involving other banks in supporting adoption of Wave’s system, with the hope that this can develop into an industry-wide improvement in how trade documentation is managed.

The bank is also part of a working group created by the International Chamber of Commerce (ICC) to examine the application of dematerialised documents in trade and supply chain finance at both a National Committee and ICC Paris level. The Wave pilot with Ornua Co-operative Ltd has clearly demonstrated the benefits of the technology in documentary trade.

O’Rourke also comments: “Our bank is also involved in extensive collaborative work with the R3 consortium, looking at digital asset transfer, smart letters of credit and interoperability across multiple blockchains in the trade space. We are delighted to have been involved in this pilot project.”

Key benefits

  • Time saving:

    The elimination of paper documents results in a faster transmission and exchange of documents between multiple parties that are typically involved in a trade finance transaction and contributes to a much faster cash conversion cycle. This in turn translates into an improved service and client experience.

  • Minimisation of risk:

    Uses cryptographic signature verification which offers a more robust and secure origination and exchange of original documents as well as full visibility and tracking of documents. This fully eliminates the loss or delay of documents in transit and the need to arrange for a substitution instrument to cover the missing or unavailable documents or costs which arise as a result.

  • Reduction of costs:

    Minimises courier, handling and administration costs associated with transactional documentation and reduces paperwork, paper waste and storage requirements.

  • Streamlined operational and internal processes:

    Provides immediate access to electronic documentation and full visibility around the status of documents from a bank and a corporate client perspective.

Portrait of David O’Rourke

David O’Rourke

Group Trade Finance Manager

David O’Rourke is Group Trade Finance Manager with Ornua Co-operative Ltd, with responsibility for global trade finance across the Ornua Group. He led the world’s first global electronic trade transaction using blockchain technology following a collaboration involving Barclays Bank and the innovative start-up company Wave.

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