Blockchain-based supply chain startup Wave graduated from the TechStars FinTech accelerator this week, in the process becoming the third firm to ink a deal with UK bank Barclays, which provides non-monetary support to the startup program.

Though the deal may not be as impactful to the industry at large as Barclays‘s attempt to lift its banking blockade on bitcoin businesses with the help of Chainalysis, the bank’s interest in Wave signals that enterprise banks may be interested in the application of the blockchain to trade finance.

Formerly called OGYDocs, Wave’s product will be leveraged by Barclays Corporate Bank in a bid to help business clients reduce costs associated with supply chain management. The deal brings a high-profile client to the startup, which is toiling on similar grounds as blockchain trade finance startups including Gazebo and Skuchain.

In interview, Wave founder Gadi Ruschin suggested that this use case was one of the more potentially lucrative for the industry. Digital solutions based on the blockchain, he said, can already outperform pen-and-paper processes used today.

Ruschin told CoinDesk:

“Blockchain is a very good solution to eliminate the pain in international trade, because you have an industry that combines all industries, because all industries are either importers or exporters at some level. You have the carrier, the bank and the customer and it’s hard to find one centralized entity everyone can work with.”

Even more advantageous, Ruschin added, is that Wave’s products don’t threaten to remove any intermediaries.

“We can change the industry without stepping on anyone’s toes,” he said.

Wave incorporates industry standard workflows, according to the company, replacing printed documents with versions that are stored electronically in blockchain transaction metadata.

“The document will go between the parties on the supply chain [over the blockchain], but if they want to change ownership, the doc will be sent to the recipient, and the sender will publish a transaction that moves the document,” Ruschin explained.

Wave is currently composed of three team members, and will base its operations in Tel Aviv following graduation from the TechStars program.

Playing with fire

Though core to its product, Ruschin said Wave will use the blockchain “as little as possible” in its design due to the ongoing uncertainty around how the technology is treated under law.

“We’re not putting anything on the blockchain,” Ruschin emphasized, “just using it to manage the ownership of each document or good in transport.”

He said Wave is developing a “layer” of technology that can interact with any blockchain, and that today it is being shaped on the bitcoin and litecoin testnets, versions of the protocols that include current rules but do not use real digital currencies.

Ruschin suggested that it’s not yet clear which blockchain Wave will use at launch, but that it is open to using private alternatives to bitcoin due to the “regulation problem” facing the industry.

“We prefer not to play with fire to be honest,” he said.

Bill of lading

In particular, Wave will focus on integrating its product in one part of the supply chain process, seeking to take the place of traditional bills of lading (BoL), documents issued by carriers that include details about a shipment, generally the type of good, quantity and destination, and give title of the property to a certain party.

Ruschin explained carriers primarily deal with companies that have finished producing goods that need to be transported internationally, and that they in turn hand over BoLs to exporters.

“As the exporter, once you receive the bill of lading, you add the invoice, the certificates that go along the supply chain and you put it all in an envelope and you bring it to your local bank,” he said. “They check it, approve it and send it to [the recipient]. They’ll check all the documents, and then this is the time they trigger the receipt.”

When the recipient’s bank receives the BoL, payments are then triggered to the supplier and goods are released.

“All these processes are based on antiquated tools on the supply chain,” Ruschin said seeking to highlight the pain point Wave’s product will address. “In any paper-based process there are problems and forgeries.”

Client acquisition

Ruschin contends the biggest challenge facing Wave is not technology, but reaching the scale it would need for its product to be successful.

As a starting point, he said the deal with Barclays would be beneficial due to its status as an international bank and position in global trade.

“They are extremely supportive regarding everyone, but specifically about us because they are a player in this market and they have signed an agreement with us. We have already simulated the functionality of how the product would work, and they are committed to it,” he continued, calling the firm a “very big target customer”.

Ruschin said Wave is in talks with other, unidentified customers, and that it benefits from the increasingly positive dialogue about blockchain technology.

However, he said the team’s priorities now are to build a strong local team in Israel before investing the resources needed to bring on more marquee clients, concluding:

“We’ll need to be bigger, but we’re still not there.”

Trade finance visualization image via Shutterstock