HSBC a reputed name in the world of Financial Services group on May 14, claimed to have completed a speedy commercial trade finance transaction which normally is a week long process using paper based processing mediums.
Behind this transaction was the blockchain technology which powers cryptocurrencies. This is the first time that the blockchain technology has been used for such a transaction.
As per reliable media reports HSBC had issued a letter of credit for food and agriculture from Cargill in U.S. This is regarding the movement of bulk soybeans to Malaysia from Argentina.
HSBC’s move regarding the use of blockchain has been received well by both private and public sector officials in major markets such as the United States and China.
The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous. The quick turnaround could mean unlocking liquidity for businesses.
– HSBC’s head of growth and innovation
The expected benefits of blockchain are efficiency improvement, improvement in transparency and cutting paper trails and hence reducing lead times for processes including an issuance of a letter of credit, which is a form of a guarantee by a bank that payment for a transaction will be received.
As per the media reports Corda blockchain platform developed by R3 has been used HSBC.
Poland, which is given credit for strengthening the user case for blockchain in Finance and banking has gone a step ahead by storing banking records on a blockchain application. Billon, a technology company in the country, said that blockchain technology will be used for storage and secure access to confidential customer information for the banking industry.
Banking sector is relying on blockchain technology since it is decentralised with various parties to a transaction linked by computers accessing the same network, functioning like a ledger.