Last week, HSBC and ING Bank successfully executed a live trade-finance transaction for international food and agriculture conglomerate Cargill using R3’s Corda blockchain platform.
This was a bulk shipment of soybeans from Argentina, through Cargill’s Geneva trading arm to Malaysia, with Cargill’s Singapore subsidiary as the purchaser. A letter of credit (LC) was issued using Corda by HSBC to ING. The two banks were acting on behalf of the Cargill organizations.
But why should anyone care?
Banks have been touting such transactions for the best part of two years now. HSBC, Bank of America Merrill Lynch (BAML) and the Infocomm Development Authority of Singapore announced a breakthrough prototype in August 2016 for handling LCs on blockchain.
Then in January 2017, HSBC was one of seven bank founders of the Digital Trade Chain consortium. It was built for SMEs in Europe to use distributed ledger technology on the Hyperledger to bring new levels of simplicity, efficiency, security and transparency to the paper-heavy blizzard of often manual and insecure processes companies undertake after a buyer has agreed to purchase goods and a supplier to deliver them in open account trading.
