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Date: Thursday, April 4, 2024

Time: 10:30pm IST / 6:00pm CEST / 5:00pm GMT / 12:00pm EDT / 9:00am PDT

Meeting link: https://zoom.us/my/hyperledger.community.backup?pwd=dkJKdHRlc3dNZEdKR1JYdW40R2pDUT09

Zoom Meeting ID: 622 333 6701          Passcode: 475869

Meeting Recording on Youtube

Upcoming events


  • April 18 Meeting will be focused on our new SIG blog
    • Please bring ideas for blog posts you would want to read or create


Meral Şengöz of the T3i Partner Network will present “Digitization of Trade and Trade Finance in Türkiye: Blockchain for Export Transactions and the Economic impact of the UN Model Law on Electronic Transferable Records”. She'll share an analysis of key developments in trade finance digitization in 2023, present a Hyperledger blockchain use case for export transactions in Türkiye, and discuss the economic impact of legal reform in Türkiye to support the adaption of the UN Model Law on Electronic Transferable Records.

The T3i Partner Network is a global collective of industry-leading specialists in trade, treasury and technology with a focus on digital innovation. T3i aims to become the trusted partner and advisor of choice for clients seeking expertise in trade finance, treasury, working capital, transaction banking and digitisation, addressing the evolving needs of fintech companies, corporates, banks, non-bank financial institutions, investors and industry bodies.

Meral Sengoz(Partner) of T3i Partner Network

Meral has over 25 years of experience in banking, fintech and government. Earlier in her career she was a trade specialist of Turkey's Ministry of Economics.
   - her digital innovation skills cross over the combined sectors of trade, technology and treasury.
   - She was a senior Isbank executive in trade finance, cross-border transactions, and commercial loans with deep knowledge on legal frameworks.
   - Digitization experience specifically for BPO of SWIFT and payment commitment of the now closed Marco Polo Network.
   - With the consultancy at DLT based trade finance fintechs for the Marco Polo Network and Contour Trade Network
   - Is a partner of T3i
   - Just completed a project(T3i) on adoption of MLETR in Turkey.
   - T3I are 40 specialists in the intersection of Trade, Technology,and Treasury. 

Meral discussed legal reform for electronic trade documents in the U.K. - UK's ETDA and adoption of MLETR
  - U.K is aligned with MLETR
  - transformation through "digital assets"
  - covers transferable trade docs such as BOL, BOE, PN
  - Under MLETR electronic trade records are equivalent to paper
  - Six countries have adopted MLETR including Germany, France and most USA states
  - most supply chain contracts are signed according to UK law

Meral provided an analysis of the key developments in Trade Finance Digitization in 2023:
   Firstly, there has been a decrease in the presence of blockchain Fintech companies.
   Following are 3 examples:
      1) Tradelens
           - ceased operation in November 2022 and was a collaboration between Maersk and IBM
           - Hosted on a Hyperledger Fabric blockchain platform on an IBM cloud instance.
           - Neutral and open platform designed to follow the flow of cargo from source to destination
           - Unfortunately, the global market in goods trading perceived Tradelens as a product for Maersk providing an advantage over other freight forwarders. There was a lack of trust.       
      2) Marco Polo Network   
            - Was established on R3's Corda framework however, closed in February 2023.
            - Business objective was to simplify and speed up the processes behind "open account trade finance services".
            - More than 30 banks signed into this network including Isbank in Turkey.
            - Progress was slower than anticipated.
       3) Contour
            - Ended its services on October 2023 as it faced challenges in attracting a sufficient user base to the platform.
            - Established on R3's Corda framework by a consortium of banks.
            - Business objective focused on digitizing and streamlining the documentary trade process.
            - The platform enabled banks and corporations to issue, manage, and process "Letters of Credit" electronically.
            - More than 21 banks and corporations onboarded and it successfully signed up more than 21 banks as members.
            - Collaborated with a number of integration and documentation partners including Finastra, CargoX, Bolero and Surecomp.
            - It was unable to attract a sufficient user base to its platform and could no longer gain financial support from its partners.

Meral detailed the challenges.......from her insights gained from experience with the MPN and Contour....

  1) There is an "Absence of Legal Frameworks" which is key to FinTech companies. Specifically:
      - A total lack of internationally and locally accepted legal regulations applied to transactions producing electronic records.
      - She has seen the large amount of paperwork to onboard be a hindrance to adoption
      - There is no ability to transfer digital assets, such as a bill of lading, to 3rd parties.
      A solution is the adoption of MLETR + signing of international agreements on this issue.

  2) A lack of International Digital Identities and Reliable Methods:
      - There is a lack of globally accepted digital "entity" identities for supply chains.
      - There is a lack of "Reliable Methods/Systems" for trade such as DLTs.
      - Cause to consume a lot of energy while enabling scalability of Fintech firms. 
      A solution is an international collaboration for LEI sandbox trials backed by regulations for reliable systems. 

   3) The complexity of the Trade Industry
       - Inherited the complexity of the supply chain industry where there are more than 20 parties and 5000 trade data areas to consider.
       - Too many stakeholders.
       - Trust problem between parties as demonstrated with the Tradelens shutdown.
       - There are no standards on trade documents - no consensus on invoices for international trade. 
       - Meral's view is with AI and common international standards can overcome these challenges. 
      A solution is cooperation between logistic firms and the banking sector exchange trade flow information+ international collaboration for standards + Free Trade Agreements. 

   4) Lack of Standards for Trade Documents/Records
        - The absence of standards hinders communication of trade records between corporations, banks, governments, and customs.
        - Some countries use the "uncommon" format of trade documents to protect their local industries. 
      A solution is to agree on standards

   5) Resistance from the Trade Stakeholders
         - Unable to change legacy organizational structures.
         - Reluctance to invest in DLT technologies.
         - Too many intermediates are unwilling to change the existing systems.
      A solution is training plus patience and incentives from governments.

   6) The "Cloud" is necessary for DLT and Digitization
         - Regulatory bodies are cautious on exchanging trade data on Cloud data centers that are international.
         - Some countries prevent the sharing of data on "Cloud" hosting.
      A solution is for inspection bodies and international agreements on DLT cryptography.

Meral detailed her main take-aways from her experience as to the current challenges:
     1) DLTs are expensive and inflexible compared to existing traditional solutions.
     2) Does not appear to be a trustable technology due to the absence of legal frameworks and control mechanisms. 
     3) The absence of standards impedes interoperability and scalability.
     4) Digital identities are not ready for prime time.

Case Study: Turkey conducted a project.....Meral detailed Turkey's utilization of Blockchain Technology:

First, there is the "Blockchain Turkey Platform(BCTR) an independent organization - 2019. The idea is to establish a stable blockchain eco system in Turkey. A bridge between private and public entities.  

Purpose is to demonstrate the impact of blockchain on export processes.
Conducted by the Ministry of Trade and the European bank for reconstruction and development(EBRD).
A private permissioned blockchain network was created modeled after Hyperledger Fabric with smart contracts.
Two types of export processes were examined:
  - electric bicycle to EU via road transportation.
  - Cologne export to the USA via air transportation.
Project scope started with the creation of an e-invoice by the exporter on the Turkish Revenue Administration's digital platform and ended with goods leaving the Turkish border. The steps of the project were:
   - current process analysis.
   - stakeholders who perform transactions in the process were identified to define the government model.
   - Determined bottlenecks and weak points in the current supply chain.
   - The newly modelled process flow implemented on Hyperledger Fabric.
   - software development and network configuration.
   - The operability of applications was tested through the test scenarios.

Project Findings:
 Main Finding 1: When transactions are made on a blockchain there is an observed reduction in work steps of 40%.
 Main Finding 2: Controls on large data sets of custom declarations, transit declarations, and e-invoices reduced the efficient use of smart contracts. A review of the data models is advised if the project continues forward. 

Also in Turkey, T3i is working on a MLETR Project: "Supporting Digital Trade in Turkey Through Legal Reform"
Objective: To develop a business case for amending the local legislative framework to align with MLETR(Model Law on Electronic Transferable Records).
Involves the Following: 
  - Conduct desktop research
  - interviews and surveys with the related local and international stakeholders to obtain relevant data
  - Use data to identify the economic benefits of legal alignment with MLETR.
  - The sequential approach for this project enables the triangulation of data:
     - Qualitative interviews
     - Market Survey
     - Triangulation of Interviews and Survey
     - Extrapolation and Estimation

Results of the MLETR Turkey Project:
  - 7% net cost improvement for businesses and 24% improvement for banks.
  - productivity gain of 21% for businesses. 
  - a lower estimate of growth of 25% if less time is spent on finance from the survey.
  - The effects of 25% growth over the survey will amplify over time as efficiencies and productivity improvement take effect.
 Project Findings:
   1) 83% of banks state legislation is a barrier to trade digitization
   2) 87% of banks state a change in legislation would accelerate adoption
   3) There are material benefits from the results
   4) A change is legislation is seen as the foundation

Meral provided details on Turkey's potential export growth of 2/3rds higher by 2030.

Research results in comparison to other studies:
 UK Study:
   - business growth estimated at 16%
   - cost improvement of 25%
 Commonwealth Study: 
   - business growth estimated at between 16% and 45%
   - costs - up to 95% depending on stage of economic development
 G7 Study:
   - business growth estimated at 16%
   - cost improvements between 7 and 25%
 Turkey Study:
   - business growth estimated at 25-40%
   - cost improvements for business of 7% and banks at 24%   


Alicia Noel 

Jeff Pribich 

Meral Sengoz

Ayhan Köseoğlu 

Melih Esmer 
Andrea Frosinini 

Zolkifli Bidin
Vera Yazbeck

Riho Vedler
Ling W Chang
Bekir Acar

Christos Tsislianis

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