HSBC completed a blockchain-based transaction for a letter of credit denominated in yuan – the first of its kind for the bank.
The transaction was executed through «Voltron», a trade finance platform developed by eight banks including BNP Paribas, Standard Chartered and HSBC itself.
The transaction involved a Hong Kong-based supplier exporting LCD parts and panels to its Shenzhen-based parent company. Conventional document exchanges take five to 10 days compared to the 24 hours required through electronic documents.
HSBC highlighted the business opportunity from letters of credit, documents issued by banks to guarantee buyer payment to sellers, citing SWIFT data that 1.2 million such issuances were made in and out of China in 2018 totaling $750 billion.
Voltron Open for Business Soon
HSBC’s APAC head of global trade and receivable finance, Ajay Sharma, notes that the bank is making progress towards turning the Voltron platform into a full proposition made accessible to clients.
«We are hoping that we will have something by end of the year, maybe the first quarter of next year, where will we know from Voltron what it costs, at which point, a lot of banks who might be sitting on the sidelines will be able to make a decision,» he said, in a «Reuters» report.
«Clearly we are hoping that through this technology, the unit cost of doing a transaction comes down, along with other benefits, such as speed.»
The banking industry continues to explore the application of blockchain to improve transaction efficiency through improved speed, reach and cost. OCBC also recently completed a pilot transaction itself in the form of a blockchain-based remittance to the Philippines.
