On Monday HSBC Holdings Plc. said that it had successfully made its first finance and trade transaction with the help of blockchain technology. This will be a major step in increasing efficiency in work and reduce any errors in international trade funding.
The British company asserted that the transaction was completed by Dutch Bank ING and HSBC for famous food group Cargill.
Use of blockchain in the banking industry is hopefully going to reduce any scope of frauds in letters of credit and other financial transactions. It would also bring down the number of steps that are being used.
Actually, letters of credit are the best way to reduce major risks between importers and exporters and it helps in nearly $ 2 trillion worth transactions. However, the process involves a long paperwork and all the document exchange takes nearly 5-10 days to be completed.
According to Vivek Ramachandran global head of innovation and growth of HSBC’s commercial banking unit “In present time buyers and suppliers are using the letter of credit to complete the transactions even though it involves transferring paper documents.”
“This means that for most businesses trade finance transactions have become convenient, quicker, clear and secure.”
Mentioning from a study done by the United Nations the statement also says that if we could convert all of Asia Pacific’s trade-related paperwork into the electronic form we could reduce costs by 31% and the time to export goods by nearly 44%.