Since we.trade started the project back in 2017, HSBC recently financed a transaction on the platform within a second round of pilots that started in June 2019, economics magazine Global Trade Review (GTR) reported on Aug. 22.
Multinational banking giant HSBC has reportedly become the first bank to complete financing transaction on European blockchain trade platform we.trade.
The transaction involved HSBC’s client Beeswift, a Midlands-based producer of protective equipment, and their sale to a Rabobank-banked Dutch firm, the report notes.
Based in Dublin, we.trade provides a Hyperledger Fabric-based tool for managing, tracking and securing open account trade transactions between SMEs in Europe. The platform intends to facilitate three major steps in SME trade, including access to trusted counterparties for direct online transactions, so-called bank payment undertaking, which is an online equivalent of a letter of credit, and financing requesting, according to the report.
Backing by major global banks
To date, we.trade is reportedly backed by 12 shareholders, including Deutsche Bank, CaixaBank, Natixis, Nordea, Rabobank, Santander, Société Générale, and HSBC itself. According to GTR, all 12 banks had signed license agreements to use the platform by January 2019.
We.trade is not the only trade finance-related blockchain initiatives that HSBC is involved in. As previously reported, the United Kingdom-based banking giant is also piloting Corda-powered blockchain trade project Voltron. Following recent pilots, HSBC reportedly said that Voltron implementation reduced transaction time by 40%.
HSBC Targets China Trade With Yuan-Demoninated Blockchain Letter of Credit
HSBC has carried out the first blockchain-based letter of credit transaction denominated in Chinese yuan.
The bank said Tuesday that the transaction was marked progress for the Voltron trade finance blockchain platform it developed alongside other banks including BNP Paribas and Standard Chartered, Reuters reports. Letter of credit are a guarantee from a bank that a seller will get paid by the buyer in a transaction.
Ajay Sharma, regional head of global trade and receivables finance for Asia-Pacific at HSBC said the bank is moving from small pilots towards a possible commercial rollout of the platform at the end of this year or early in 2020. By which point, HSBC is hoping that the results of its work on Voltron so far will attract other banks to join the effort.
Sharma said the bank expects the use of blockchain to facilitate trade transactions to bring the cost of doing business down and usher in speed improvements. The yuan-based letter of credit transaction – involving a shipment of LCD equipment from Hong Kong to China – took just 24 hours, much faster than the normal 5-10 days it takes using the existing paper-based system.
Facilitating blockchain trade in the yuan promises a way into a major market. Based on information from SWIFT, China-related trade produced 1.2 million letters of credit worth $750 billion last year, HSBC said.
In early August, Standard Chartered Bank said it had successfully completed its first international letter of credit transaction on the Voltron platform.
HSBC Enacts First Letter of Credit on a Blockchain in Malaysia
Major bank HSBC has announced the successful enactment of a letter of credit (LC) on a blockchain in Malaysia.
English language local fintech news outlet Fintech News Malaysia reported the development on Oct. 14, noting that the transaction involved packaging firm Simply Packaging importing resin from an unspecified Singaporean chemicals company. The issuing bank was HSBC Malaysia and the nominated bank was HSBC Singapore.
Per the report, this is the eleventh blockchain-powered transaction carried out by HSBC and the first such pilot carried by its Malaysian branch. HSBC Malaysia CEO Stuart Milne commented on the successful test:
“I am very pleased that HSBC has pioneered Malaysia’s first pilot blockchain LC transaction. This showcases our strong commitment and ability to support cross-border trade by Malaysian businesses using cutting-edge technology platforms.”
HSBC’s involvement with blockchain
According to the article, trade between Malaysia and Singapore was worth over $85 billion last year and the administrative paperwork often delays the delivery of goods traveling across this trade route. The exchange and processing of the documents involved in reportedly take five to 10 days on average, while the pilot managed to cut the time to 24 hours.
As Cointelegraph reported in September, at the time HSBC has completed the first yuan-denominated letter of credit transaction on a blockchain using the Voltron trade finance platform.