A trade finance platform based on blockchain developed by large banks such as HSBC, BNP Paribas, and Standard Chartered has been launched in Hong Kong.
The platform called “e Trade Connect” aims to improve the efficiency of international trade financing by shortening the time necessary to obtain approval for trade loan applications from 36 hours to 4 hours. Total sales revenues for HSBC in fiscal year 2017 from trade finance was USD 2.52 billion, and is one of the world’s leading bank in this industry. Also, total trade finance transactions as of year 2017 exceeded USD 9 trillion, however, the industry is still highly reliant on its legacy system and paper-based system.
The “e Trade Connect” platform digitizes transaction documents and automates many of the trade finance processes and can rationalize interactions among transactions. In addition to improving efficiency, it is also expected to reduce LOC fraud and other document related risks.
The first successful transaction which used this new platform was purchases by “Pricerite” which is a retail store for furniture and household goods. Pricerite Chairman Bankee Kwan has commented “Blockchain has transformed a cumbersome, complex process into a simpler but more secure and efficient way of conducting trade.”
HSBC, BNP Paribas, Standard Chartered, as well as Agricultural Bank of China are said to have been in involved in this development. Development of the platform is also facilitated by the Hong Kong Monetary Authority (HKMA).