British-based banking giant HSBC Holdings claims it performed the world’s first trade finance transaction using R3’s blockchain platform on Monday, completing a smart contract with ING according to a report by Reuters. The two banks handled a letter of credit for agricultural giant Cargill, the largest private company in the U.S.
Corda, a business-specific enterprise-grade blockchain platform, claims to “remove costly friction in business transactions by enabling institutions to transact directly using smart contracts, while ensuring the highest levels of privacy and security.”
Vivek Ramachandran, global head of innovation and growth at HSBC’s commercial banking unit, claims the integration of blockchain technology into trade finance will make it “simpler, faster, more transparent and more secure.”
“This is an inflection point for how trade is conducted. At the moment, buyers and suppliers use a letter of credit, typically concluded by physically transferring paper documents, to underpin transactions. With blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous.”
According to the statement by HSBC, digitizing all of Asia Pacific’s trade-related paperwork could slash the time it takes to export goods by up to 44% and cut costs by up to 31%.