The HSBC headquarters is seen in the Canary Wharf financial district in east London Thomson Reuters HONG KONG (Reuters) - HSBC Holdings Plc said on Monday it had performed the world's first trade finance transaction using blockchain technology, a major step in boosting efficiency and reducing errors in the multi-trillion-dollar funding of worldwide trade.
The exchange was for the bulk shipment of soybeans by Cargill from Argentina to Malaysia.
While there have been several instances of proof-of-concept transactions performed using the blockchain, this one between HSBC and ING is the first that indicates its commercial applications, a spokesperson said to CNBC.
"This is an inflection point for how trade is conducted", Vivek Ramachandran, HSBC's global head of innovation and growth for commercial banking, said in the statement. The Cargill blockchain transaction was completed in 24 hours.
The news provides further fuel to the debate that promotes blockchain as a solution to modernising modern finance and trade, many of which still rely on outdated computer platforms, or even paper-based systems.
This particular use case, as reported in the Financial Times, has been developed on Corda's R3 platform, a piece of tech developed by a global group of financial institutions banks. "The quick turnaround could mean unlocking liquidity for businesses", added he. It was developed by R3, a blockchain consortium based in NY. Blockchain technology could greatly improve the speed of these transactions while eliminating a great deal of the paperwork involved in an LoC. It is one of the core members of Marco Polo, an initiative focused on a trade finance platform built on an interoperable business network powered by open Application Programming Interfaces (API) and blockchain technology. This is because they will finally be able to carry out transactions using a faster and simpler method while also benefiting from more security and transparency.
More banks all around the world seem to be showing interest in decentralized ledger technology which is the same technology that supports cryptocurrencies such as Bitcoin (BTC).
According to HSBC, the transaction can be replicated.