HSBC processes first letter of credit with blockchain
(14 May 2018 – UK) HSBC has processed a letter of credit for Cargill in what they say is the world’s first commercially viable trade finance transaction using blockchain.
The bank said the blockchain trade had shown the platform was ready to be commercially adopted across the industry, shaking up an industry that is traditionally paper heavy and slow.
“The next stage is actually encouraging as many participants as possible to sign up to the utility,” said Vivek Ramachandran, HSBC’s head of innovation and growth for commercial banking, noting that banks, shipping companies, ports and customs operations would all have to take up the same technology before it could gain widespread usage. “We don’t envisage the platform as anything other than a utility.”
The transaction for US food and agricultural group Cargill was for a shipment of soyabeans from Argentina to Malaysia. The Corda blockchain platform, developed by technology consortium R3 was used, with ING, which has also adopted the technology, a counterparty on the deal.
Unlike previous trade finance pilots using blockchain, this transaction could be replicated if the same counterparties were involved, showing that the technology is ready for commercial use Mr Ramachandran said.
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