HSBC claims first trade transaction with blockchain

The bank says letter of credit for Carhill opens door for distribution ledger technology

HSBC Holdings has claimed the world's first commercially viable trade-finance deal using blockchain technology, potentially opening the door for mass use.

The bank said it has successfully completed a transaction for food and agricultural group Carhill, processing a letter of credit for the shipment of soya beans from Argentina to Malaysia.

HSBC used the Corda blockchain platform, which it developed in partnership with a number of other banks such as ING, BNP Paris and State Street, with the technology side provided by consortium R3 and Finastra.

The blockchain distributed ledger technology, which underpins cryptocurrencies such as Bitcoin, has the potential to be used for encrypted and unhackable record-keeping across a number of industries.

"The next stage is actually encouraging as many participants as possible to sign up to the utility," said Vivek Ramachandran, head of innovation and growth for commercial banking at HSBC.

It is hoped the use of blockchain in banking will help trim the risk of fraudulent transactions and cut back the number of steps needed in the process and speed up single transactions, which can take up to a week, to a matter of hours.

Letters of credit are one of the most widely used ways of reducing risk between importers and exporters, but the process creates long paper trails and takes between five and ten days to hand over documentation.

"At the moment, buyers and suppliers use a letter of credit, typically concluded by physically transferring paper documents, to underpin transactions," added Ramachandran.

"What that means for businesses is that trade finance transactions have been made simpler, faster, more transparent and more secure."

HSBC is not alone in looking at ways blockchain technology can be used to do more than just support cryptocurrenices. IBM has been testing the technology as a way to track precious stones in jewellery.

Image credit: Shutterstock

Featured Resources

Managing security risk and compliance in a challenging landscape

How key technology partners grow with your organisation

Download now

Evaluate your order-to-cash process

15 recommended metrics to benchmark your O2C operations

Download now

AI 360: Hold, fold, or double down?

How AI can benefit your business

Download now

Getting started with Azure Red Hat OpenShift

A developer’s guide to improving application building and deployment capabilities

Download now

Most Popular

How to move Windows 10 from your old hard drive to SSD
operating systems

How to move Windows 10 from your old hard drive to SSD

21 Jan 2021
What is the Raspberry Pi Pico?
Hardware

What is the Raspberry Pi Pico?

21 Jan 2021
How to recover deleted emails in Gmail
email delivery

How to recover deleted emails in Gmail

6 Jan 2021