Bank of New York Mellon has become the 28th bank in the list of banks under Marco Polo Trade Finance Association operating on R3’s Corda.
BNY Mellon has an asset value of $373-billion. Joon Kim, global head of trade finance at BNY Mellon, says that the bank is assessing Marco Polo’s technology with prospects to onboard clients if the network’s capabilities are in line with clients’ interests.
“Our hope is that the business requirements of our clients will meet with what Marco Polo has to offer, and our intention is to move into live production A-S-A-P,” Kim said, meaning “as soon as possible.”
Kim said that BNY Mellon works with 1,400 financial institutions in total but declined to expose the number of corporate and bank customers benefiting from the bank’s trade services.
BNY Mellon provides white-labeled trading services to banks worldwide that intend to generate their trade operations without the need to come up with a new division. At the annual Sibos conference held in September of this year, the bank declared that it had partnered with KeyBank, a U.S. regional bank with $416 billion in assets, to expand its trade services.
Kim said that trade finance is a “critical” part of BNY Mellon’s transaction banking business. It is also made up of payments and liquidity products.
According to Kim, BNY Mellon chose Marco Polo since the blockchain is well suited for open account financing, which totals up to around 85 percent of trade finance, and is effective for large corporates. (In open account transactions, the goods are shipped and delivered before payment is due; with letter-of-credit financing, the bank guarantees a buyer’s payment ahead of time).
From the other blockchain trade finance associations that Kim said BNY inspected but didn’t meet the bank’s wants, Voltron is constructed around letters of credit that serves small to medium businesses.
Marco Polo was initiated by blockchain companies R3 and TradeIX to create real-time settlements and transparency in trading relationships. Bank of America and Mastercard joined the network in September. In October this year, the network performed its inaugural Russia-Germany transactions.
BNY Mellon has interacted with R3’s Corda in other situations. In October 2017, the bank took part in a marketplace with four other banks that use Corda as a center for dispensing a pool of loans.
The bank is also venturing into crypto. In April, BNY Mellon commenced digital asset safekeeping (different than digital asset custody) by availing private key storage for bitcoin futures exchange Bakkt.
The bank is also to be the manager and transfer agent for shares of the VanEck SolidX Bitcoin Trust being sold to institutions as well as Bitwise’s proposed bitcoin exchange-traded fund.