HSBC Completes World’s First Trade Financing Deal On Corda Platform May 14, 2018 May 14, 2018 Kelly Cromley http://1AZFjzw2#Nwf63pYaMWq#xIY
NewsMay 14, 2018 by Kelly Cromley

HSBC Completes World’s First Trade Financing Deal On Corda Platform

The $9 trillion trade finance sector is all set for blockchain adoption, with HSBC completing the world’s first trade finance transaction using the disruptive technology. The London-based bank processed L/C, which stands for a letter of credit, for Cargill, a US food and agricultural group, using blockchain technology.

The arrival of blockchain technology is expected to reduce paper works and processing delays that are common with trade finance transactions. What would normally be completed in days can now be completed in a matter of few hours.
As the data cannot be tampered or hacked, there are innumerable use cases for the blockchain transaction. Commenting on the transaction, Vivek Ramachandran, head of innovation and growth for commercial banking at HSBC, said

“The next stage is actually encouraging as many participants as possible to sign up to the utility.”

Ramachandran has also pointed out that the adoption will complete a full circle only when shipping companies, ports, customs operations, and banks take up the technology. Ramachandran said “We don’t envisage the platform as anything other than a utility.”

Ramachandran has acknowledged that blockchain technology will vastly reduce the documentation process related to trade finance in the years to come. HSBC generated $2.52 billion in trade finance last year, making it one of the largest banks in the industry. The Cargill transaction, mentioned earlier, involved a shipment of soybeans from Argentina to Malaysia last week. The bank used Corda blockchain platform, developed by R3 consortium. Dutch bank ING, the counter party to the deal, has also adopted the technology.

Ramachandran compared trade finance using blockchain technology to the use of shipping containers, which got off slowly but eventually got adopted by ports, railways, ships, and companies involved in trading. He believes the blockchain technology will soon become the standard for trade finance transactions. Shipping containers have now become the primary mode of worldwide shipping. Many banks and enterprises have already launched pilots for live trade transactions.

Gadi Ruschin, chief executive at Wave, has cautioned that many of the blockchain products related bill of lading will eventually fail.Wave is creating a range of bill-of-lading products based on blockchain technology.

Ruschin said

“The blockchain is only an enabling technology for different products and each product should be evaluated in many aspects before evaluating the chances for adoption — technology, regulations, cost of the service, security but the most important one is the product market fit.”

AuthorKelly Cromley

Kelly is our in house crytpto researcher, delving into the stories which matter from blockchains being used in the real world to new ico coming out.