HSBC and ING complete a trade-finance commodities transaction for Cargill, the world’s first using blockchain
HSBC and ING have completed a trade-finance commodities transaction for Cargill that is the world’s first using blockchain. Blockchain is considered a safe option because it reduces the risk of fraud. At the same time, it reduces costs and speeds up the transaction significantly.
HSBC and ING have executed the world’s first trade finance transaction using blockchain technology. The contract was executed on behalf of Cargill. This is a major step in boosting efficiency and reducing errors in the multi-trillion-dollar funding of international trade. HSBC says, putting all of Asia Pacific’s trade-related paperwork into electronic form could slash the time it takes to export goods by up to 44 percent and cut costs by up to 31 percent.
The use of blockchain technology in the banking industry is will reduce the risk of fraud in letters of credit and other transactions as well as cut down on the number of steps used. Since the birth of banking, commodity trading has involved Letters of Credit. Letters of credit are still today the most widely used ways of reducing risk between importers and exporters, helping guarantee more than $2 trillion worth of transactions. But the process creates a long paper trail and takes between five and 10 days or even more to physically exchange documentation. Now trade finance transactions will be simpler, faster, more transparent and more secure. This is day one in a revolution in the physical trading industry.