Standard Chartered makes first blockchain based cross-bank Letter of Credit transaction
Photo: Standard Chartered
The transaction was done in partnership with Asian Development Bank and the Bank for Investment and Development of Vietnam, known as BIDV. It also marks the completion of ADB’s first credit guarantee using distributed ledger technology, it said in a statement.
The transaction was made over Contour’s network, a blockchain-based open industry platform focused on digitising trade finance, and involved a $50,000 shipment.
“The coronavirus pandemic has shown that it is essential the trade finance industry quickly digitises operations to make global trade and supply chains more resilient and robust. This innovation makes trade more efficient, reduces risk and lowers barriers to entry for small and medium-sized businesses in developing Asia,” said ADB’s Head of Trade & Supply Chain Finance Steven Beck.
Compared to the paper-intensive and time-consuming processes involved in the traditional methods of trade finance, by digitising the end to end exchange of information and streamlining the process of LC issuance and confirmation, all trade participants achieved a significant reduction in processing time from up to five days to within seven hours.
“The success completion of this pilot marks another remarkable milestone in our journey towards transforming documentary trade with risk participation weaved into the blockchain platform. We believe this added capability will help to drive scale and adoption in the industry, as well as increase operational resilience for both our clients and partners,” stated Sam Mathew, Global Head of Documentary Trade, Standard Chartered.
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Reuters | Jessica Jaganathan