HSBC Holdings Plc completed a transaction using Blockchain, which is said to make commercial financing technology commercially viable.
Together with ING Bank NV, the London bank has completed a Letter of Liability for Cargill Inc. The blockchain technology developed by the R3 consortium, it said in an e-mail message on Monday. The letter of credit supported a shipment of soybeans shipped from Argentina to Malaysia last week, the statement added.
The transaction was an end-to-end trade between a buyer and a seller and their respective banks, which was shared on a digital application rather than multiple systems, according to HSBC. It was the first scalable live trade finance transaction with blockchain, he added.
"This is a turning point for the trade," said Vivek Ramachandran, HSBC's global head of innovation and growth in commercial banking. "Blockchain eliminates the need for paper reconciliation because all parties are linked to the platform and updates are made immediately."
Blockchain helps streamline the traditional paper-intensive process of trade finance, which typically takes between five and ten days to exchange documents, HSBC said. In the Cargill transaction, the exchange was completed in 24 hours, he added.