Hong Kong Turns to Ping An Group for Blockchain-driven Trade Finance Platform

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The Hong Kong Monetary Authority plans to launch a blockchain-based trade finance platform using technology that has already been deployed in mainland China.

The initiative is one of the first state-backed trade finance platforms, and will see the involvement of 21 banks including HSBC and Standard Chartered, who will enjoy joint ownership of the project.

“Instead of individual banks trying to do this you have the regulator trying to bring the banks together,” said Jessica Tan, deputy chief executive of Ping An Group.

The move arrives just after HSBC conducted the world’s first commercially viable trade finance transaction with the blockchain in May, as well as the launch of a similar initiative by Deutsche Bank and Rabobank.

The Hong Kong platform will make use of technology developed by OneConnect, the fintech subsidiary of Chinese insurance giant Ping An Group.

Blockchain technology will reduce the time and complication involved in trade finance and supply chain finance transactions by facilitating the verification process.

According to some estimates transaction times could fall from around two weeks at present to just a single day.

OneConnect’s technology is expected to improve the ability of small companies to access trade and supply-chain finance by reducing the cost of due diligence.

The use of blockchain technology will bring the standard advantages of a decentralised ledger system to Hong Kong’s new trade finance platform, including near total resistance to hacking or fraud.

One example is its ability to prevent companies from extracting more funds than needed from banks for a given transaction, by enabling all parties to check the sums of financing requested by means of the blockchain.

The initiative will also serve as a key testing ground for OneConnect’s overseas ambitions. The Ping An subsidiary opened an office in Singapore at the start of the year, and currently employs over 100 staff outside of China.

 

 

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