HSBC takes another big leap with blockchain in trade finance
IN SPITE OF all the lofty promises and transformative qualities of blockchain, many enterprises are still struggling to deploy the technology to solve business problems efficiently.
The distributed ledger technology with tamper proof facility is supposed to revolutionize the financial sector, and while many organizations are developing and exploring compelling use cases, issues such as high cost of development and lack of interoperability have made blockchain adoption relatively sluggish.
However, that may be a thing of a past. Already considered a pioneer when it comes to blockchain deployment, Hong Kong-based banking giant HSBC took another significant step forward when it completed a transaction that connected two independently built blockchain platforms.
Partnering with Dubai-based retailer, Landmark Group, the bank used its blockchain powered Voltron platform, to issue a Letter of Credit which that connected with the retailer’s ReChainME, which enabled connectivity with its logistics partners at both ends of a key trading corridor.
This, in effect, provided unprecedented visibility in the transaction that involved a shipment from Bee Dee Industries in Hong Kong to Babyshop, Landmark Group’s family retail brand in the United Arab Emirates (UAE).
All the key participant and relevant stakeholders along the logistical supply chain were able to track and monitor the shipment in real-time which decreases the time to completion by up to 12 days which is a 40 percent reduction.
Further, the method also lessens the need for paper documents which are screened and updated at different stages and touch-points within any regular supply chain operations.
Collaboration to accelerate technology development
“We have seen several advancements in digitizing trade, each with their own specialist network for secure communication, resulting in disparate ‘digital islands.’
“The challenge lies in connecting these digital islands to create a cohesive network, and this is where blockchain comes in,” said HSBC’s Head of Trade for the Middle East Sunil Veeti.
As integrating two complementary blockchain platforms is a major milestone in blockchain development, this fulfillment highlights the dynamism and interoperability of Voltron, according to Veeti.
“In a world where businesses are increasingly positioning their supply chains across several markets, blockchain platforms will undoubtedly give them competitive advantage by increasing the velocity of trade without compromising on privacy and security.”
HSBC had previously executed four major digitized Letter of Credit transactions across its global network using Voltron, and this is the first time the platform is connected to a complementary system, and has been used to issue a Letter of Credit between UAE and Hong Kong.
Other banks such as Standard Chartered Bank, Bank of America, DBS Bank, ANZ Bank, among others, have also launched blockchain initiatives — but none have come close in matching HSBC’s volume of business — reported being worth approximately US$250 billion.
While this latest achievement speaks volumes about HSBC’s innovative capabilities, it also highlights the fact that collaboration is critical in accelerating technological development and overcoming challenges inherent in sophisticated technology such as the blockchain.
- Forrester: The only CX metric that matters has a $-sign in front of it
- Manufacturing processes can be further augmented with ML technology
- Let it go: Why AI should move from cloud to edge-computing
- The agri-food system as we know it is not, and will never be good enough
- Indonesia to subject foreign digital service providers to local taxes