CONSENSUS 2017: DELOITTE UNVEILS PROJECT “MERCURY” FOR TRADE FINANCE ON THE BLOCKCHAIN
Deloitte Mercury Trade Finance: A screen shot from an overview video from Deloitte explaining how blockchain technology can enable new funding and real time contract models for the industry. Source: YouTube (https://youtu.be/K4_oZ004ghQ).
Deloitte, one of the “big four” consulting firms, has been in the news in relation to their efforts in research and development of prototype blockchain applications for financial services and healthcare industries. At the recently concluded Consensus 2017, cryptocurrency and blockchain publication Coindesk’s annual industry summit, Deloitte unveiled “Deloitte Mercury”, a trade finance proof of concept using smart contracts on the blockchain.
At the same event, Deloitte also showcased a number of other use cases built on blockchain infrastructure, including ‘Regchain’, a regulatory reporting platform and prototypes for reinsurance, KYC or “Know Your Customer”, real estate leasing and mutual fund administration processes among others. With “Deloitte Mercury”, the firm’s portfolio of blockchain prototypes and projects has grown to more than 30.
Eric Piscini –principal and global Blockchain leader for financial services with Deloitte Consulting LLP shared more details about Deloitte’s vision and future roadmap in harnessing blockchain based applications to reimagine contract processes underpinning the global financial transactions ecosystem.
“The potential to rewire financial transactions is significant with Blockchain,” said Piscini. “Similar to when we rewired the backbones of the power, transportation and information industries, it will take courage and time to change the ways we transact today — and that’s what we hope to show at Consensus 2017. Blockchain will be bigger than you can imagine, but will be harder than everybody expected.”
Deloitte Mercury: Re-imaging Trade Finance on the Blockchain
Project Mercury has been in the making at Deloitte since 2016 when the firm released a paper and video which described the vision for reshaping the global trade finance market, measured at $10 trillion in 2015, using a blockchain infrastructure.
The concept uses the disintermediation, provenance and real time features of a public distributed ledger on a blockchain, to address pain points such as delays, duplication, fraud and regulatory compliance, associated with current manual processes and fragmented platforms across globally distributed participants.
In March 2017, Deloitte officially announced in a press release that they have been working with the Hong Kong Monetary Authority (“HKMA”) and five leading trade finance banks in Hong Kong to develop a Distributed Ledger Technology (“DLT”) proof of concept for Trade Finance. Industry participants included Bank of China (Hong Kong) Limited, The Bank of East Asia, Limited, Hang Seng Bank Limited, the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) and Standard Chartered Bank (Hong Kong) Limited.
As per the release, the proof of concept demonstrated the application of DLT in digitizing paper-intensive processes through smart contracts, reducing the risk of fraudulent trade and duplicate financing, and improving the transparency and new product innovation of the industry, strengthening Hong Kong as a major trade finance hub.
Executives from HKMA and participating trade finance banks also endorsed the potential of DLT to bring in innovative practices while lowering costs, improving efficiency, transparency and trust in the marketplace.
At Consensus 2017, Deloitte revealed plans to move to real time transaction trials as well as expand the solution to participants all over the global trade finance industry. During Consensus 2017, Eric Piscini, Deloitte’s principal and global Blockchain leader for financial services told CoinDesk: “This is the expansion on that foundation. We need participation in Europe, Asia and to expand the platform.”
Deloitte’s Roadmap for Enterprise Blockchain Applications
Global technology and consulting firms have been investing on the enterprise applications of blockchain technology for over two years now. Among the “big four” accounting firms, Deloitte is accelerating their efforts in 2017 and with multiple announcements on research, analysis and partnerships dominating Consensus 2017.
Deloitte’s blockchain team – comprised of more than 800 professionals across 20 countries – works with international organizations looking to roll out blockchain-enabled solutions.
Deloitte’s portfolio of more than 30 blockchain-related prototypes covers a multitude of uses such as digital identity, digital banking, cross-border payments, trade finance, and loyalty and rewards solutions, as well as distinct efforts for the investment management and insurance sectors.
At Consensus 2017, Deloitte also revealed new research on blockchain and announced partnerships with two consortiums, the Enterprise Ethereum Alliance and the Hyperledger project. Deloitte has officially joined the Enterprise Ethereum Alliance (EEA), a consortium of 86 member companies, launched in February to promote corporate use of the Ethereum blockchain, and the Hyperledger project, the Linux-led umbrella effort that houses various open-source enterprise distributed ledger technologies contributed by members such as Digital Asset Holdings and IBM.
The EEA, founded by technology giants Microsoft and Intel, ASLO includes brands such as BP, Samsung SDS and the National Bank of Canada, in addition to Deloitte.
Hyperledger is a global collaboration including leaders in finance, banking, IoT, supply chain, manufacturing and technology. The project was launched in February 2016 and has grown from 30 to 142 members, with Deloitte and rival accounting firm Ernst and Young joining the initiative.
As with Ethereum, Deloitte has already been working on the Hyperledger platform, prior to signing up as an official member. These partnerships will allow it to become a contributor in delivering enterprise use cases on the two blockchain platforms.