Banks around the world are working hard to integrate new technologies. It was a historic day for HSBC Bank Bangladesh which is part of the global banking firm HSBC. It is worth mentioning that, Bangladesh branch of HSBC conducted the country’s first blockchain-based letter of a credit transaction on the Contour DLT platform.
Interestingly, the purpose of this transaction was to settle the importation of 20,000 tonnes of fuel oil. The United Group’s Singapore subsidiary United Mymensingh Power was the supplier. Based on the information provided by Md Mahbub ur Rahman who serves as HSBC Bangladesh’s chief executive, the transaction underlined the bank’s commitment to supporting cross-border trade by Bangladeshi businesses using cutting-edge technology platforms.
Importantly, global payments service SWIFT estimated that Bangladeshi trades using letters of credit, or LCs were worth more than $34 billion during the first half of 2020. It is worth mentioning that, thanks to blockchain technology, the time it takes to process transactions reduced from between 5 and 10 days to less than 24 hours.
HSBC Bank Bangladesh and blockchain technology
Importantly, every second matter when it comes to fuel oil LCs, and blockchain technology will help to manage time efficiently. Moreover, it also ensures increased efficiency as well as better cost management.
Let’s have a look at Contour. Interestingly, it is a blockchain platform built using R3’s Corda that connects financial institutions and corporate entities in a decentralized trade finance network.
People should keep in mind that, eight financial institutions are the owners of Contour. The list includes HSBC, ING, Citi, Bangkok Bank, PNP Paribas, Standard Chartered, CTBC, and SEB. As a reminder, the platform’s development began in mid-2017, then dubbed Voltron. Interestingly, eight different entities spanning 17 countries tested Contour.
Importantly, HSBC Bank Bangladesh was not the only organization that used Contour. Notably, mining firm Vale and its partners completed its first iron sale over the blockchain. Vale and its partners used this blockchain platform to issue a letter of credit.
Based on the information provided by the company, Vale sold 176,000 tons of iron ore to Nanjing Iron & Steel, sending the material from Malaysia to China. Interestingly, the company ensured end-to-end security in the transaction with real-time visibility to the stakeholder documentation available on blockchain technology. Companies around the world should pay more attention to blockchain. Thanks to this technology it is easier to offer a better service to the clients. Moreover, HSBC, as well as other banks, have the potential to make this technology more popular around the world.