HSBC Holdings Plc, one of the largest banking and financial services institution, recently completed a transaction using blockchain. This shows that it is practical to use blockchain technology for trade finance.
HSBC opened the way for blockchain to be adopted by completing a transaction using blockchain technology. The blockchain trade successfully processed a letter of credit for Cargill Inc, an agricultural group based in Minnetonka, Minnesota
R3 consortium developed the blockchain technology on which Cargill relies and the letter of credit backed a shipment of soybeans from Argentina to Malaysia. Only one shared digital application successfully processed the transaction. It is the first scalable live trade finance transaction using blockchain.
HSBC Comments On The Completed Blockchain Transaction
Vivek Ramachandran, HSBC’s global head of innovation and growth for commercial banking comments on the success of the transaction. He notes that trading is more efficient using blockchain technology.
HSBC expressed confidence that with blockchain, the traditional paper-intensive method previously used in trade finance is no longer applicable and HSBC noted that the transaction was faster, taking only 24 hours. The traditional method required 5-10 days for transactions to completely process.
Ramachandran thinks blockchain technology will play a critical role in trade finance over the next five years. He advises banks, ports, and traders to adopt common platforms and standard for blockchain trade finance.