HSBC issues a letter of credit for Cargill within 24 hours using a blockchain platform.
According to a recent report on the CNBC.com, HSBC has issued a letter of credit for U.S. food and agriculture firm Cargill. The trade finance transaction involved a bulk shipment of soybeans from Argentina to Malaysia. The letter of credit was issued from HSBC to Dutch lender ING.
Although wary of bitcoin many bankers have embraced blockchain technology as an immutable, decentralized, common ledger for recording online transactions.
Issuing a letter of credit normally take 5 to 10 working days with a lot of paperwork going back and forth between the bank, the seller and the buyer - depending upon the complexity of the transaction.
According to ING and Cargill, HSBC issued this letter of credit within 24 hours!
In a company statement Vivek Ramachandran, head of growth and innovation at HSBC, said: "The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous.
"The quick turnaround could mean unlocking liquidity for businesses."
HSBC has used a platform developed by blockchain start-up R3 called Corda.
R3 has been working with a number of banking institutions to develop customized blockchain solutions for a variety of applications.
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