HSBC and ING Successfully Tests A Trade-Finance Deal Using The Corda Blockchain Technology
The UK-based banking giant HSBC in collaborating with its Dutch counterpart ING has successfully completed a trade-finance deal for Cargill - a food and agricultural group. The banking giant made use of the Corda Blockchain Technology for financing a shipment of soya beans from Argentina to Malaysia.
On its official Twitter handle, HSBC tweeted: “HSBC & ING Bank have used Corda blockchain technology to finance a shipment of soya beans from Argentina to Malaysia for food & agriculture conglomerate Cargill. Revolutionizing the future of Documentary Trade.”
The arrival of the blockchain in banking and other sectors has made it possible to cut several intermediary processes considerably reducing the risks of fraud and making peer-to-peer transactions more safe and secure.
Vivek Ramachandran, HSBC's global head of innovation and growth for commercial banking, called this as the “inflection point” and a major step for effectively conducting an international deal in this trillion dollars trade-finance market.
Ramachandran also said that "the next stage is actually encouraging as many participants as possible to sign up to the utility” and to ensure its widespread usage, shipping companies, banks, ports and custom operations will have to take up the same technology. Ramachandran further mentioned that "We don’t envisage the platform as anything other than a utility.”
Currently, the $US2 trillion trade-finance market is using letters of credit are used widely as ways to reducing risks between the importers and exporters. However, this process has huge paper trail documentation process that takes place on an average of 5 to 10 days.
Ramachandran said: "At the moment, buyers and suppliers use a letter of credit, typically concluded by physically transferring paper documents, to underpin transactions.”
He further added that "With blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous. What this means for businesses is that trade finance transactions have been made simpler, faster, more transparent and more secure.”
Transferring the paperwork done in the entire trade-finance industry into electronic format will reduce the export time of the goods by manifold times as well as cutting the costs included.