Deutsche Bank AG along with six other financial majors has signed up to a joint venture in establishing a blockchain-based platform for trade and financial transactions which will be known as the Digital Trade Chain (DTC). The said new technology is to be adopted by European small and medium-sized enterprises for transacting domestically and overseas with ease.
The German bank will collaborate with HSBC, KBC, Natixis, Rabobank, Société Générale, and UniCredit to build the DTC and have signed a Memorandum of Understanding in Brussels. The said memorandum marks the financials’ collective effort to develop and manage the new product.
Each bank was said to have put in a six-figure sum as investment, although the exact amount was not disclosed.
In an interview with a major financial news portal, HSBC head of Global Trade and Receivables Finance Andrew Betts said that their bank liked the cooperative approach that the collaboration imbibes. He also stated that HSBC plus the 6 other banks have been “advocates of the industry” operating jointly with blockchain as the current goal they are eyeing.
“We really, genuinely pool our resources and expertise in terms of what we know about this technology so we can generate benefits for clients,” the HSBC head added.
Digital Trade Chain or DTC is said to have spurred from a trade finance tool prototype created by Belgium’s KBC. The said product, which won the Efma Accenture Innovation Award for best new product or service of 2016 in October, uses blockchain technology to connect all parties engaging in international trade transaction seamlessly. Parties include buyers, sellers, transporters, banks financing deals of each side, etc. The technology allows transactions to be made online and via mobile devices.
The new product is expected to simplify the SMEs trade finance processes by minimizing problems that can occur in aspects like managing, tracking and securing domestic and international trade transactions.
The DTC is also said to cut the order-to-settlement processing time and reduce the need for paperwork when it comes to transactions. The platform is said to offer a more transparent end-to-end approach to trading and helps in making transactions with new partners less risky.
Deutsche Bank’s collaboration might have proved to be good for the German financial as it traded 1.42 percent at 17.85, at the time of writing, on the green territory following the collaboration’s announcement. It also went up 2.46 percent at 19.18 at the New York Stock Exchange’s previous close.
The bank’s shares have been performing on a strong trend line since November, with the shares testing the line a little bit before bouncing back up again and closing somehow stronger.
The bank currently has a market cap of 24.26 billion euros. It has an EPS of -1.46 and a PE Ratio of -13.18.
What Previous Collaborations Tell Us
In 2015, reports of Deutsche Bank teaming up with big technological development firms Microsoft, HCl, and IBM to launch three innovation labs and pledged to spend up to 1 billion euros on the development of a financial technology in the next five years.
The collaboration’s announcement sent the bank’s shares on a bullish movement closing at 31.52, included in the bank’s list of historical share prices.
Another news that saw the bank’s shares rising is the opening of an innovation lab in Silicon Valley. Share prices reached 15.99 upon the bank’s tech lab’s opening.
Since bank shares have a history of bullishness upon news of collaborations.
It can be predicted that the previous collaborations of Deutsche Bank with tech start-ups have caused the bank's shares to surge in the past and the current team up with other financials to provide new technology for the financial sector might prove to be good for the bank itself.