Banking and financial services giants HSBC and ING have completed a trade finance transaction for agri-food trading company Cargill using a single blockchain system.
Claimed as a world first, Reuters reports, the live commercial trade finance transaction saw an export of a shipment of soybeans from Argentina to Malaysia, during which Cargill Geneva sold the goods on behalf of its Argentine arm team and Cargill Singapore received them on behalf of the Malaysian arm of the firm.
HSBC said that while other trade finance deals have been carried out using blockchain together with other technologies, the Cargill trade was the first to use a single blockchain application, the report indicates.
According to news source GTR, the transaction was carried out using a letter of credit tool within R3’s distributed ledger technology (DLT) platform Corda.
The letter of credit involved was issued by HSBC, while ING served as the advising bank, and the process was slashed to 24 hours from the paper-based standard of 5-10 days. While the letter of credit was exchanged over the blockchain, while bill of lading and other transaction elements were not, the report adds.
Following the successful transaction, HSBC is focusing on more live tests and ultimately aims to promote the system for industry-wide adoption, Vivek Ramachandran, global head of innovation at HSBC Commercial Banking, told GTR.
“We’ve still got a few more steps to do before we get to widespread adoption,” he was quoted as saying.
The news comes after HSBC revealed its plans in February to launch several pilot programs based on existing proof-of-concept (PoC) projects.
“Going from that PoC in 2016, we’re at the tipping point of getting our customers involved in live transactions in the coming weeks and months. The technology has come a long way, we’re much more comfortable with its security and scalability,” the bank’s senior innovation manager Joshua Kroeker, said at the time.
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Author: Sujha Sundararajan