HSBC Bangladesh has just conducted the country’s first Blockchain-based letter of credit transaction (LC) on the Contour DLT platform.
The Bangladeshi branch of the global firm used the transaction to settle the importation of 20,000 tons of fuel oil from United Group’s Singapore subsidiary United Mymensigh Power. The Blockchain-based transaction received plaudits the Bangladeshi arm’s CEO Md Mahbub ur Rahman, who sees it as sign of a new era.
The chief executive said that the transaction showed the bank’s commitment to supporting cross-border trade using “cutting-edge technology platforms.”
He went on to add that he believed the technology would go a long way in helping maintain transparency.
“I believe this will usher in a new era of routing international trade transactions as businesses and governments recognize transparency, security and swiftness in performing tasks using Blockchain technology.”
The transaction which grabbed the attention of many brought even more attention to use of LCs by Bangladeshi firms. Global payment service SWIFT has it that such transactions by Bangladeshi firms amounted to more than $34 billion during the first half of this year.
Value in saving time
To be used to move transactions worth billions, the technology must be adding real value to the overall process. This is exactly the case according to United Group’s Managing Director Moinuddin Hasan Rashi. According to Rashi, utilizing Blockchain technology cuts the time taken to process transactions and helps manage time efficiently.
“Fuel oil LCs are highly time-sensitive where every second counts and we believe this blockchain technology will help to manage time efficiently and also ensure increased efficiency and better cost management.”
Rashi also said that transaction times had been reduced from five to ten days to an astonishing “less than 24 hours”
The Contour Platform
The transaction was made possible thanks to blockchain platform Contour. The platform is built using R3’S Corda and connects financial and corporate institutions in a decentralized trade finance network. The platform was recently launched after a testing period that saw it tried by 80 different institutions spanning over 17 countries. The fact that it is owned by eight big financial institutions adds to its credibility and builds even more trust. Contour is co-owned by HSBC, ING, Citi, Bangkok Bank, BNP Paribas, Standard Chartered, SEB, and CTBC.
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