Banking giant HSBC has made use of blockchain-based platform to facilitate a Letter of Credit (LC) transaction between clients situated in Australia and China.
HSBC announced at the start of April that it had used the Voltron blockchain trade finance platform to process an LC transaction involving the shipment of wool by Fox & Lillie in Australia to China SDIC International Trade Nanjing Company in China.
The Voltron platform employs R3’s Corda Technology to reduce the time and cost required for LC processing, and currently enjoys the participation of eight banks including HSBC, ING, Bangkok Bank, BNP Paribas, CTBC Holding, NatWest, SEB and Standard Chartered.
HSBC has already teamed up with ING to use Voltron to help process a shipment of soya beans from Argentina to Malaysia for Cargill last May, while in November it worked with BNP Paribas to process a shipment of iron ore to China from Australia on behalf of Cargill and Rio Tinto.
HSBC says that China is the world’s biggest issuer of LC’s in terms of value, with the total amount approaching USD$750 billion in 2018.
“Digitising this market will shake up trade financing in China – reducing the amount of paperwork required to complete a transaction, shortening turnaround time and greatly lowering the cost of trade,” said Ajay Sharma, Asia Pacific Regional Head of Global Trade and Receivables Finance, HSBC.
Yang Xiaoxiong, chair of China SDIC International Trade Nanjing Company, hailed the ability of blockchain technology to heighten security by facilitating data and document verification.
“As a trading company, we’ve long dealt with issues in paper-based transactions including the lengthy time need in the exchange of documents, delays caused by amendments and lack of security and transparency,” said Yang.
“We are ready to further explore the new technology more broadly together with our banking and trading partners.”