On Oct 31st 2018, Reuters reported that a dozen banks which include the Agricultural Bank of China, HSBC, Standard Chartered and BNP Paribas (among others), developed a new blockchain trade finance platform which was launched in Hong Kong.
Facilitated by the Hong Kong Monetary Authority (HKMA), the platform which was christened eTrade Connect is designed to improve time efficiency in the financing of international trade. It achieves this by greatly reducing the number of hours spent on the approval of trade loan applications from thirty-six to four. In 2017, HSBC set out on the path to becoming one of the global banking leaders in the industry. It is reported to have earned $2.52 billion in trade-finance revenue in 2017 alone.
Reuters reports that in 2017, trade finance dealings were worth over $9 trillion although the industry still remains largely dependent on legacy systems and paper-based systems that prove unwieldy in the face of current technological advancements.
The eTrade platform nullifies the awkwardness of paper-based systems via its digitization of trade documents. By automating many trade finance processes, the platform streamlines transactions between the parties involved. Reuter reports that efficiency is only one of the benefits of the platform. Risks of fraud in relevant documents like letters of credit (LoC) will also be greatly diminished by the system.
A furniture and households goods retailer, Pricerite made the first purchases that were exchanged and confirmed on the new platform as successful. Its chairman, Bankee Kwan, informed Reuters that “blockchain has transformed a cumbersome, complex process into a simpler but more secure and efficient way of conducting trade.”
As far as financial transactions go, blockchain has come to stay as more financial institutions continue to optimize the concept. Just this July, trading platform we.trade also pooled resources with Hyperledger Fabric-powered European blockchain to complete its first live operations. It is a product of financial institutions such as HSBC, Rabobank, Santander, Société Générale, UniCredit, Deutsche Bank, among others.
In May 2018, HSBC completed the first of its kind in trade finance, regarded as “the world’s first ever” was supported and powered by blockchain: Letter of Credit for food and agricultural king-size company, Cargill, one of US’ biggest private firm by revenue.