IBM Takes 7% Stake in Trade Finance Blockchain Network We.Trade

IBM has become a shareholder in we.trade, the trade finance platform jointly owned by 12 European banks, signaling further consolidation across the enterprise blockchain space.

Ciaran McGowan, we.trade’s CEO, said the deepening relationship with Big Blue will help the platform in its next phase of global expansion.

“Now we’ve got a very strong partnership with IBM for scaling globally, and we are working closely together on Asia, Africa and Latin America,” McGowan said.

We.trade has the distinction of being the first enterprise blockchain consortium to go live, which happened back in early 2018. The platform was formed by a group of banks to help European small and medium-sized enterprises (SMEs) get better access to trade finance. IBM has been the project’s technology partner from inception.

Read more: Staying Alive: Why the World of Enterprise Blockchain Has Turned to Collaborations

However, the plan at we.trade was always to take its technology in-house and rely less on IBM, as stated by McGowan at last October’s Sibos event in London.

“It’s all about getting the right balance,” McGowan said this week regarding IBM’s new role as part-owner of the platform as well as the sole technology provider. “Back then [in 2019], we had seven staff at the company and it wasn’t realistic for seven staff to make all the decisions, to collate all the different requirements, to prioritize and manage everything.”

The move also raises the question of intellectual property (IP) ownership, something that has caused problems for IBM in the past with blockchain consortia.

Part of we.trade’s success was down to the fact no single entity had more say than another. The platform’s previous CEO, Roberto Mancone, pointed to a “clear distinction” between IBM’s IP, which was the components used to build the platform, and the IP of the platform itself. 

Read more: IBM and Maersk Struggle to Sign Partners to Shipping Blockchain

These lines appear to be blurring now. In addition to owning the Hyperledger-based IBM Blockchain Platform that we.trade is built on, IBM would own 7% of the platform’s IP, McGowan confirmed.

A concession being promoted by we.trade (and IBM) involves a new multi-cloud approach so customers can use Microsoft Azure or AWS, instead of having to use IBM Cloud.

IBM joins we.trade’s existing 12 shareholder banks: CaixaBank, Deutsche Bank, Erste Group, HSBC, KBC, Nordea, Rabobank, Santander, Société Générale, UBS and UniCredit. 

McGowan said some European banks are “playing wait and see” with enterprise blockchain, especially in the busy trade finance space.

“I think that because there are quite a number of players in the space, and quite a number of banks on those platforms, the European banks have been kind of sitting back and are maybe afraid to join one platform in case another does better.”

Read more: Banking Giant UBS Goes Live on We.Trade Blockchain for Trade Finance

Still, McGowan said we.trade plans to interoperate with Hong Kong’s eTradeConnect, a blockchain-based trade finance platform formed by 12 Asian banks. An investment round planned for September will see the platform onboarding some insurance companies as well as more banks, he added.

Asked if IBM is getting its hooks into a platform that previously had a semblance of independence, Parm Sangha, the global trade finance leader at IBM, said: “Hyperledger is open source; IBM has opened up to have a multi-cloud approach. The only thing we are collaborating smarter on is where does this all go, and that is the pursuit of market share and market size.”

A source involved in the enterprise blockchain space who wished to remain anonymous said we can expect to see IBM begin rolling together its big blockchain services such as TradeLens and Food Trust, in an attempt to get critical network mass.

“I’m not sure that strategy will work – the cost of transition may be higher than the cost of integrating those services together,” they said.