HSBC and ING have facilitated the shipping of soya to Malaysia from Argentina using blockchain. HSBC claims it is the world’s first commercial and financial transaction based on the blockchain. Both parties to the agreement used blockchain technology. “This is a turning point for trade,” said Vivec Ramachandran, HSBC’s global head of Innovation and Growth in Commercial Banking.
The use of blockchain technology in the banking industry is expected to reduce the risk of fraud in shares and other financial transactions, and to reduce the number of steps taken.
Letter of Credit is one of the most widely used ways to reduce the risk between importers and exporters, helping to guarantee transactions with a total value of more than USD 2 trillion, but this process creates a long “paperwork” and takes five to ten days to exchange documentation.
“At the moment, buyers and suppliers use a letter of credit, usually requiring the physical delivery of paper documents, to enable transactions,” said Vivec Ramachandran, global head of innovation and development in HSBC’s commercial banking.
“For businesses, this means that trade finance transactions have been simplified, faster, more transparent and safer.”
Using all the formalities related to trade in the Asia-Pacific region in electronic form can reduce the time needed to export goods by up to 44 percent and reduce costs by as much as 31 percent, the statement said by HSBC, citing a study conducted by the UN.