Published: Tue, May 15, 2018
Business | By Kate Woods

HSBC is shaking up a centuries-old industry using blockchain

HSBC is shaking up a centuries-old industry using blockchain

The banking group HSBC has announced that it has used blockchain to complete the first scalable live trade finance transaction for a letter of credit with United States food and agricultural conglomerate Cargill.

"HSBC and ING Bank have successfully executed a... finance transaction for global food and agriculture conglomerate Cargill using R3's Corda scalable blockchain platform", the statement said.

"The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous", Vivek Ramachandran, head of growth and innovation at HSBC, said in a statement. The transaction was completed within 24 hours which is significantly faster than the outdated system which takes days to complete such deals.

The UK-based lender says it completed a transaction involving a shipment of soybeans from the food and agricultural company Cargill.

More news: Koreas to hold high-level talks on Wednesday

HSBC and ING said the technology is "perfect" for trade because it keeps an unchangeable log of the transaction and details of the products being bought or sold.

Blockchain technology group R3's CEO David E Rutter explained that the platform "Corda enables the development of applications... that bring all parties together on a single, shared infrastructure while ensuring the highest levels of privacy and security".

By putting all Asia Pacific's trade-related paperwork onto a distributed ledgers, it could cut the time it takes to export the goods by 44 percent, which in turn could cut costs by 31 percent.

This follows tests announced in March 2016 by a global banking consortium - which included ING, and HSBC - that completed cloud-based tests of five different blockchain technologies.

More news: Hawaiian Officials Encourage More Evacuations After New Fissure Opens

R3, along with supporting banks, is now looking to expand the use of the network as a utility for the trade finance sector.

According to HSBC, the transaction can be replicated. R3 is now working with a consortium of banks to determine blockchain solutions for a range of issues.

Although blockchain has most commonly been associated with person-to-person transactions using cryptocurrencies like Bitcoin, there's been a huge amount of interest from businesses both big and small in adopting the technology for a wide variety of other purposes.

More news: Dismantling of North Korea nuclear site 'well under way': US monitor

Like this: