KUALA LUMPUR: HSBC and ING Bank have successfully executed the first live trade finance transaction via blockchain for a shipment of soybeans from Argentina to Malaysia.
The transaction was conducted via Cargill’s Geneva and Singapore subsidiaries, with the company mainly involved in the international food and agriculture business, HSBC said in a statement.
The deal was financed using a Letter of Credit (LOC), which was completed digitally on R3’s scalable Corda blockchain platform, marking a tipping point in the way goods are bought and sold.
HSBC’s Global Head of Innovation and Growth, Commercial Banking, Vivek Ramachandran said this is an inflection point for how trade is conducted.
“At the moment, buyers and suppliers use a LOC, typically concluded by physically transferring paper documents, to underpin transactions.
“With blockchain, the need for paper reconciliation is removed because all parties are linked on the platform with instantaneous updates. What this means for businesses is that, trade finance transactions have been made simpler, faster, more transparent and secure,” he added.
This technology is ideally suited for trade because it helps streamline a previously paper-intensive process which usually takes between five to 10 days to exchange documentation, but this exchange was done in 24 hours.
According to the United Nations, digitising all of the Asia-Pacific region’s trade-related paperwork could slash the time it takes to export goods by up to 44 per cent.
In doing so, costs are also cut by up to 31 per cent, while boosting exports by as much as US$257 billion annually. – Bernama