HSBC and ING, the biggest names in the world of banking, have announced the successful completion of the first finance transaction using blockchain technology. HSBC claims that the new system is already prepared for an official launch.
The news about HSBC Holdings utilizing distributed ledger technology has been released on Monday. The operation was done on behalf of US agribusiness conglomerate Cargill.
By introducing the new DLT system, the banks aim to eliminate the fraud risks and to speed significantly the up the process of transactions. Traditional documentary credit can take up to 10 days to process, whereas DLT system can do it much faster by automating the intermediate steps.
Vivek Ramachandran, head of innovation and growth at HSBC’s commercial banking division, stated:
“At the moment, buyers and suppliers use a letter of credit, typically concluded by physically transferring paper documents, to underpin transactions. What this means for businesses is that trade finance transactions have been made simpler, faster, more transparent and more secure.”
Ramachandran expressed his confidence that the technology is ready for mass adoption. The systems will be based on the Corda blockchain of DLT developer R3.
About a year ago HSBC and 21 other multinational banks announced their joint effort to develop a blockchain-based international payments system.