HONG KONG (Reuters) – A new blockchain-based commercial finance platform, developed by HSBC (HSBA.L), Standard Chartered (STAN.L) and 10 other banks, was launched in Hong Kong on Wednesday to increase the efficiency of multibillion-dollar international trade financing.
FILE PHOTO: The Bitcoin logo is seen on a pillow at the 2018 blockchain technology conference in New York, New York, USA, May 16, 2018. REUTERS / Mike Segar / File Photo
On Wednesday, the HSBC platform announced that the HSBC platform has enabled the British lender to focus on reducing the time it takes to approve four-hour commercial loan applications, compared to the usual one and a half days.
Other major banks that participated in the development of the platform – facilitated by the de facto central bank in Hong Kong, the Hong Kong Monetary Authority (HKMA) – included the Agricultural Bank of China (1288.HK) and BNP Paribas (BNPP.PA).
Commercial finance transactions were worth more than $ 9 trillion in 2017, but the industry is strongly paper based and follows processes and procedures that have changed little in decades or even centuries.
It is expected that the use of blockchain technology in the banking sector will reduce the risk of fraud in letters of credit (LoC) and other transactions used in commercial financing, as well as reducing the number of passages used.
The technology of distributed ledger, or blockchain, can provide a means to streamline some of these processes, and a number of banking consortia around the world are working on how to do it.
The Hong Kong e-trade platform aims to improve efficiency and facilitate counterparties' ability to obtain financing, digitizing commercial documents and automating commercial finance processes using blockchain technology.
On Wednesday, HSBC stated that among the first transactions created, traded and confirmed on eTrade, it was the purchase of supplies from the Pricelite furniture and household goods retailer.
"Blockchain has transformed a complex and cumbersome process in a simpler but safer and more efficient way of conducting trade," said Pricerite President Bankee Kwan in a statement released by HSBC.
The eTrade platform will collaborate with the European digital trading platform We.Trade, which counts Deutsche Bank
Reporting by Alun John; Editing by Christopher Cushing