HSBC announced that it has for the first time, used blockchain technology to finish a speedy commercial trade finance transaction that usually takes around a week when using conventional paper-based processing protocol.
The transaction was the first time that blockchain has been used for a commercial trade finance settlement.
The development was reported on CNBC, which said that HSBC had given a letter of credit for U.S. food and agriculture firm Cargill. The settlement talks about the movement of bulk soybeans to Malaysia from Argentina, with the letter of credit for this given by ING, a Netherlands based financier.
HSBC said that it is thrilled about the development as the user case for blockchain gets more momentum and support from private and public sector officials in markets such as the United States and China.
“The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous. The quick turnaround could mean unlocking liquidity for businesses,” HSBC’s head of growth and innovation said in a statement.
Blockchain is pegged to augment efficiencies, advance transparency and cut down on paper trails, thereby lessening lead times for processes such as letter of credit issuance.
Blockchain is heavily decentralised, with various corners to a transaction linked by computers that are accessing the same network, giving a ledger look which could be beneficial in the banking sector.
Reports say HSBC made use of the Corda blockchain platform that was worked on by R3. The company runs one of the world’s most popular blockchain banking consortiums.
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