Trade finance is quickly emerging as one of the major areas that are going to be changed with arrival of blockchain technology. We’ve seen a number of instances where major companies around the world have been developing trade finance applications based on blockchain technology, and now it has emerged that one of the leading financial groups in the world has successfully completed world’s first blockchain based trade finance transaction.
That’s right – HSBC Group, a leader in global finance industry, said on Monday that it has utilized blockchain technology to speedily complete a commercial trade finance transaction which would otherwise have taken several weeks to be completed. According to a CNBC report what HSBC did was issuing a letter of credit for US Food and Agriculture giant Cargill. The transaction was for movement of soybeans from Argentina to Malaysia.
Speaking about the transaction HSBC said that it’s excited to move ahead with this development as blockchain technology gains traction in major markets like United States and China. Compan’s Head of Growth and Innovation said in his statement:
“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.”
Reports suggest that HSBC’s trade finance platform relies on Coroda blockchain platform of R3. Besides’s Ripple’s technology Coroda blockchain platform is another wildly popular blockchain platform across the world.
Blockchain technology is expected to significantly reduce paper trails in trade financing, thereby improving efficiency, transparency and most importantly the time required for each of these transactions. Before HSBC a number of other leading financial institutions and IT companies have also shown their interest in trade finance related applications of blockchain. For example, in Malaysia 9 banks are jointly developing a blockchain based trade financing app. A number of banks have also joined UBS and IBM to develop blockchain based trade financing platform. And in India Infosys also announced the global launch of its own blockchain based trade finance solution some time ago.