The multi-national bank HSBC’s branch in Bangladesh has successfully carried out the nation’s first blockchain-powered letter of credit (LC) transboundary trade through the Contour DLT platform. The business transaction was executed by HSBC to import 20,000 tonnes of fuel oil by United Mymensingh Power, a subsidiary of Singapore’s United Group.
Md Mahbub ur Rahman, HSBC Bangaladesh’s chief executive expressed that this transaction displays the bank’s dedication ”to supporting cross-border trade using “cutting-edge technology platforms.”
“I believe this will usher in a new era of routing international trade transactions as businesses and governments recognize transparency, security, and swiftness in performing tasks using blockchain technology.”Md Mahbub ur Rahman
Global payments service SWIFT assessed that Bangladeshi trades by using the letters of credit valued greater than $34 billion in the initial half of 2020.
“Blockchain technology reduces processing time”: HSBC
The duration required to process the transaction was decreased from 5 to 10 days to less than a day by using blockchain technology. Moinuddin Hasan Rashi, United Group’s managing director, announced:
“Fuel oil LCs are highly time-sensitive where every second count and we believe this blockchain technology will help to manage time efficiently and also ensure increased efficiency and better cost management.”
Contour, created by R3’s Corda, is a blockchain platform that links corporate organizations and financial entities in a “decentralized trade finance network.” It is owned by eight financial organizations counting HSBC, Standard Chartered, Bangkok Bank, Citi, CTBC, SEB, BNP Paribas, and ING. Before being released in closed beta in 2018, its development had started in the middle of 2017 and was unofficially called “Voltron”.
Eighty independent organizations expanding over 17 nations put Contour to test before the launch of its commercial beta at the start of 2020, with the platform withdrawing from beta only a month ago.
Moreover, Contour was also used to work out a 176,000 iron ore trade between China and Malaysia. Further, it was used to carry out the first blockchain-powered letter of credit transboundary trade between Thailand and Vietnam by a Philippine-based Asian Development Bank.