An Industry Study of Blockchain Technology’s Impact on Trade Finance

9 Pages Posted: 24 Sep 2019

See all articles by Daniel Hellwig

Daniel Hellwig

WHU - Otto Beisheim School of Management

Arnd Huchzermeier

WHU - Otto Beisheim School of Management

Date Written: September 14, 2019

Abstract

Blockchain’s transformational potential has been heralded across several industries, with some enthusiastic voices comparing its foreseeable impact to that of the essential internet communication protocol TCP-IP. Several enterprises have since adopted distributed ledger technology (DLT)-based approaches as part of their operational procedures, with a view on blockchain as a magic bullet for addressing existing operational inefficiencies, improving transparency, and creating new products. However, in the absence of large-scale feasibility studies and data-based quantifications of the impact of blockchain-based technologies, companies are jumping into early-stage proof-of-concept (POC) projects without clearly-defined key performance indicators or goals for the expected return on investment; efficiency claims and reports of lessons learned are similarly lacking. A quantitative assessment of (1) the nature of a successful application of blockchain technology for supply chain and trade finance, and (2) the current market’s perceived benefits, key challenges, and expected horizons of blockchain is therefore sorely needed. Here we present an empirical study of the industry’s perception of blockchain-based innovation and potential for value creation for supply chain and trade finance. Our survey results show that, while industry experts across all regions view the technology and the value it can provide to streamline and simplify trade finance processes favorably, none of the study’s participants have yet realized any financial or customer-value benefit. Indeed, despite predictions, no tangible savings appear to have been realized to date. Furthermore, while initial technical proof-of-concept (POC) implementations of blockchain have been executed without major difficulties, we find that challenges associated with broader-scale adoption remain unaddressed. Notably, coordinating the simultaneous adoption of a shared solution by different stakeholders remains a formidable challenge, thus hampering the potential large-scale adoption of blockchain technology.

Keywords: Blockchain, Supply Chain Management, Trade Finance, Blockchain Security

Suggested Citation

Hellwig, Daniel and Huchzermeier, Arnd, An Industry Study of Blockchain Technology’s Impact on Trade Finance (September 14, 2019). Available at SSRN: https://ssrn.com/abstract=3453767 or http://dx.doi.org/10.2139/ssrn.3453767

Daniel Hellwig (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Arnd Huchzermeier

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany
+49-261-6509380 (Phone)
+49-261-6509389 (Fax)

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