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The Bangladesh branch of global banking firm HSBC conducted the country’s first blockchain-based letter of credit transaction on the Contour DLT platform.
The transaction was used to settle the import of 20,000 tons of fuel oil from United Group’s Singapore-based subsidiary United Mymensingh Power.
HSBC Bangaladesh’s chief executive, Md Mahbub ur Rahman, described the transaction as a demonstration of the bank’s commitment “to support cross-border trade by Bangladeshi businesses using state-of-the-art technology platforms”.
“I believe this will usher in a new era of routing international business transactions, as companies and governments recognize transparency, security and speed in executing business using blockchain technology.”
Global payments service SWIFT estimated that Bangladeshi trades using letters of credit, or LCs, were worth more than $ 34 billion during the first half of 2020.
Using blockchain technology, the time it takes to process the transaction has been reduced from five to 10 days to less than 24 hours. United Group CEO Moinuddin Hasan Rashi said:
“Fuel oil LCs are highly time sensitive, where every second counts and we believe this blockchain technology will help manage time efficiently and will also ensure greater efficiency and better cost management.”
Contour is a blockchain platform built using R3 Corda that connects financial institutions and corporate entities in a “decentralized trade finance network”.
Contour is owned by eight financial institutions including HSBC, ING, Citi, Bangkok Bank, BNP Paribas, Standard Chartered, SEB and CTBC. Development of the platform began in mid-2017, later dubbed “Voltron”, before being launched in closed beta the following year.
Eighty different entities in 17 countries tested Contour until the launch of the commercial beta in early 2020, with the platform exiting the beta just a month ago.
Contour has also been used to settle a 176,000-dollar iron ore trade between Malaysia and China, with the Philippines-based Asian Development Bank also using the platform to execute the first cross-border LC blockchain transaction between Vietnam and Thailand.
