HSBC conducts "world's first" trade finance deal

HSBC Says Performs First Trade Finance Transaction Using Blockchain

Financial services group HSBC said on Monday it had for the first time utilised blockchain technology to complete a speedy commercial trade finance transaction that normally takes around a week using normal paper-based processing mediums.

The LOC backed a shipment of soybeans to Malaysia from Argentina last week.

The transaction demonstrates that Blockchain is a commercially and operationally viable solution for trade digitization, the banks added.

The transaction took place in one step on a single platform in 24 hours, rather than the days or weeks required for numerous third parties to mediate the transaction, as has been the case up to now.

Despite their general hostility towards cryptocurrency industry, a growing number of banks have started embracing its underlying technology-the blockchain. An email statement revealed that the R3 consortium created the blockchain technology used to facilitate the trade deal.

"The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous", he continued.

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HSBC said the technology is "perfect for trade" because it keeps an unchangeable secure log of the transaction and full details of the products being bought or sold, over a much-reduced time span.

Working with R3, the banks from all over the world tested trading using blockchain and cloud technology.

According to professionals' estimation, putting all trade-related paper work of Asia Pacific onto the blockchain could help to reduce the time need for goods export by up to 44% and to cut costs by up to 31%. "The quick turnaround could mean unlocking liquidity for businesses", HSBC's head of growth and innovation was quoted saying in a statement. It is one of the core members of Marco Polo, an initiative focused on a trade finance platform built on an interoperable business network powered by open Application Programming Interfaces (API) and blockchain technology.

More banks all around the world seem to be showing interest in decentralized ledger technology which is the same technology that supports cryptocurrencies such as Bitcoin (BTC).

Ivar Wiersma, Managing Director, Innovation Wholesale Banking, ING, said: "It's exciting to see this transaction has been completed successfully with clear client benefits in speed and ease in execution".

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