On Wednesday, October 31st, HSBC, in collaboration with Standard Chartered and 10 other banks, launched a blockchain-based trade finance platform in Hong Kong. The blockchain platform aims to boost efficiency in the multi-trillion-dollar funding of global trade.
Dubbed as “eTrade Connect,” the trade finance platform basically helps to reduce loan approval time. As a result, eTrade Connect approves loan applications in just 4 hours against the existing 36 hours average time.
Hong Kong’s Central Bank, the Hong Kong Monetary Authority (HKMA), facilitated the development of this trade-finance platform. Other participating banking giants include BNP Paribas and the Agricultural Bank of China.
HSBC Changing the Traditional Methods of Trade-Finance Using Blockchain
By the end of 2017, the global trade-finance industry was worth $9T USD. However, over the past many decades, the entire industry is largely paper-based. Moreover, there is little change in the processes and procedures involved.
Experts believe that introducing blockchain technology in the banking industry will bring a considerable change. Blockchain is likely to reduce the risk of frauds in the letter of credit (LoC) and other transactions as well.
Furthermore, it will also streamline the entire process, in quick, simple, and easy steps. In addition to that, the blockchain also offers seamless connectivity between banks present at different global locations.
eTrade Connect Simplifying Financial Trade
The basic aim of the eTrade Connect platform in Hong Kong is to digitize trade documents and automate trade finance processes by leveraging blockchain technology.
HSBC said that using the eTrade platform, it successfully tested “the purchase of supplies by furniture and household goods retailer Pricerite.” It was the first transaction created, exchanged, and confirmed using the eTrade platform.
HSBC issued a statement by Pricerite Chairman, Bankee Kwan, praising the blockchain technology.
“Blockchain has transformed a cumbersome, complex process into a simpler but more secure and efficient way of conducting trade,” said Kwan.
The HKMA issued a statement saying that the eTrade platform will collaborate with Europe-based digital trading platform We.Trade. This platform counts UBS, HSBC, and Deutsche Bank, as its participants that use similar technology.
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