HSBC said today that it had completed a transaction using blockchain, saying that indicates the technology is commercially viable for trade finance.
Along with Dutch bank ING, HSBC successfully completed the transaction for food and agricultural group Cargill. They used Corda blockchain technology to finance a shipment of soya beans from Argentina to Malaysia.
The rise of blockchain tech in the banking industry is intended to help trim the risk of fraud in transactions, and help cut back the number of steps needed in the process.
Vivek Ramachandran, HSBC's global head of innovation and growth for commercial banking, called the milestone an "inflection point" for how trade is conducted.
"With blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous," he said.
HSBC & ING Bank have used Corda blockchain technology to finance a shipment of soya beans from Argentina to Malaysia for food & agriculture conglomerate Cargill. Revolutionising the future of Documentary Trade. #TransformingTrade pic.twitter.com/MOBA1gQYIl— HSBC (@HSBC) May 13, 2018
Last October it emerged that HSBC, ING and BNY Mellon were among seven big banks working together to create a platform for syndicated loans using blockchain technology.
BNP Paribas and State Street were also among the financial institutions been named as involved in the project. Blockchain consortium R3 and Finastra will provide the technology side of things.
A report last month found that the UK banking system is among the most exposed to disruption from blockchain technologies.
Cross-border claims from banks in the UK to counterparts in others are equivalent to more than 90 per cent of GDP, according to Moody’s Investors Services. However, the implementation of blockchain technologies for clearing and settlement of transactions could cut out the need for middlemen in trillions of pounds worth of transactions.
While the eradication of costs from transactions could be a big boost for end users, it poses a challenge to the portions of the industry which provide those services.