One of the largest banks in the world, HSBC along with Standard Chartered and other banks has developed a blockchain-based trade finance platform.
Trade Finance Platform Launched in Hong Kong
HSBC, Standard Chartered and 10 other banks have developed a trade finance platform powered by blockchain technology. The platform called “eTrade Connect” was launched in Hong Kong.
The development was reported by Reuters in an article published earlier on Wednesday. The platform is expected to bring efficiency to the multi-trillion-dollar funding for international trade.
HSBC is the 7th largest bank in the world. The bank is reported to have said:
The platform, eTrade Connect, had allowed the Asia-focused British lender to reduce the time it takes to approve trade loan applications to four hours, compared with the usual one-and-a-half days.
The development of the system was facilitated by the Hong Kong Monetary Authority (HKMA), Hong Kong’s central bank. The other banks who participated in the project include Agricultural Bank of China and BNP Paribas.
The global trade finance industry, which handled transactions over $9 trillion in 2017, is reported to be heavily paper-based.
According to the article:
The use of blockchain technology in the banking industry is expected to reduce the risk of fraud in letters of credit (LoC) and other transactions used in trade finance, as well as cut down on the number of steps used.
Use of blockchain technology is expected to streamline some of the processes followed in the industry which reportedly have not changed in decades.
“The e-Trade platform in Hong Kong aims to improve efficiency and facilitate counterparties’ ability to obtain finance by digitizing trade documents and automating trade finance processes by leveraging the blockchain technology,” said the article.
Platform Goes Live
HSBC cited that among the first transactions successfully completed on eTrade was the “purchase of supplies by furniture and household goods retailer Pricerite.”
Pricerite Chairman Bankee Kwan said:
Blockchain has transformed a cumbersome, complex process into a simpler but more secure and efficient way of conducting trade.
HKMA said in a statement that eTrade platform would collaborate with its European counterpart We.Trade, which uses similar technology and has Deutsche Bank, UBS, and HSBC as members.
The use of blockchains and smart contracts in trade financing will not only make the process efficient but also eliminate the risk of frauds. Platforms like eTrade will bring transparency.
What are your thoughts on the use of blockchains for trade finance? Let us know in the comments below.
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