Vietnamese Bank, HDBank has joined the Contour network for international trading, and issued its first letters of credit on the blockchain. With this, HDBank has become the first financial institution in Vietnam to issue letters of credit by blockchain technology.
Letters of credit are deemed to be an important document in international trade because they provides a guarantee from an institution with good financial standing, like a bank, that the purchaser’s amount will be given to the seller on time and with the right amount.
Processing letters of credit through blockchain has several advantages like better security, permanent record of the payment, and reduction of time taken to process the payment to just a few hours.
As per a report by Viet Nam News, on January 6, one of the stated goals of HDBank’s is to become a “Happy digital bank” and the issuance, presentation of documentation, and payment of letters of credit on the blockchain successfully acts as a landmark event towards the goal.
Along with L/C advising bank in Taiwan, the first one’s to be part of the transaction was a Taiwanese yarn and local fiber importer.
The Vietnamese bank joined the HSBC-backed Contour platform for letters of credit in May 2020 and apparently R3 Corda-based platform after a successful trial in 2019 had received a commercial launch in Q2 2020.