HSBC announced on Sunday that in cooperation with Dutch bank ING, it had performed the world’s first commercially viable trade finance transaction using blockchain technology.
The bank issued a letter of credit for U.S. food and agriculture firm Cargill using blockchain. The trade finance transaction involved a bulk shipment of soybeans from Argentina to Malaysia.
HSBC announced that the transaction was an end-to-end trade between a buyer and a seller and their respective banks that was completed on one shared digital application rather than multiple systems.
HSBC & ING Bank have used Corda blockchain technology to finance a shipment of soya beans from Argentina to Malaysia for food & agriculture conglomerate Cargill. Revolutionising the future of Documentary Trade. #TransformingTrade pic.twitter.com/MOBA1gQYIl
— HSBC (@HSBC) May 13, 2018
According to HSBC and ING, the exchange was performed in 24 hours. Through a paper-based system it normally takes 5-10 days to complete such exchanges. HSBC used a platform developed by blockchain start-up R3 called Corda.
“The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous. The quick turnaround could mean unlocking liquidity for businesses,” Vivek Ramachandran, head of growth and innovation at HSBC, told.
A spokesman for HSBC told CNBC that while there have been proof-of-concept transactions performed using blockchain technology, HSBC’s was the first that could have commercial applications.