HSBC Bangladesh has completed the country’s first blockchain-based LC (Letter of Credit) transaction on the Contour DLT platform.
The spread of the blockchain in the logistics industry is making further progress
The Bangladeshi branchof global banking firm Bitcoin Machine has completed the country’s first blockchain-based Letter of Credit (LC ) transaction on the Contour DLT platform. The transaction served to process the import of 20,000 tons of heating oil. It comes from United Mymensingh Power, a subsidiary of the United Group in Singapore. Media reportsAccording to the use of blockchain, the processing time for the letter of credit has been reduced from the usual five to ten days to less than 24 hours.
LC deals are a common practice in international export. The buyer’s or importer’s bank does not make payment until the exporter presents certain papers. Due to the sometimes large volume of these documents, the process is usually very time-consuming and labor-intensive. In the first half of 2020, Bangladesh’s trade in LCs totaled according to SWIFT, a global provider of secure financial news services, to more than $ 34 billion.
HSBC wants to usher in a new era with blockchain
HSBC Bangaladesh head Md Mahbub ur Rahman described the transaction as an expression of the bank’s commitment to „support cross-border trade using state-of-the-art technology platforms“.
I believe this will usher in a new era of international trade processing as companies and governments recognize transparency, security and speed in performing tasks using blockchain technology.
Md Mahbub ur Rahman, CEO HSBC Bangaladesh
Moinuddin Hasan Rashid, Managing Director of the United Group, pointed out the very sensitive time window for fuel oil LCs, where every second often counts. The United Group is convinced that blockchain technology will help manage the tight time budget efficiently. The bottom line is that this would also ensure better cost management, said Rashid. The transaction was completed using the Contour platform. This is built using R3’s Corda blockchain technology . It connects a global network of banks and companies.
Contour is owned by eight financial institutions. In addition to HSBC, these include ING, Citi, Bangkok Bank, BNP Paribas, Standard Chartered, SEB and CTBC. The development of the platform, which was initially called „Voltron“, began in mid-2017. The following year it was released as a closed beta version. Contour recently completed the official beta phase.