HSBC carried out the first financial operation in the world using blockchain
Hong Kong and Shanghai Banking Corporation, for its acronym in English (HSBC), being the third largest bank in the world, has successfully completed the first commercial financing transaction in the world, where HSBC expresses:
"This shows that technology is viable for financial commerce"
The transaction had a letter of credit from the US food and agriculture company Cargill, which supported the shipment of a shipment of soybeans from Argentina to Malaysia. HSBC being the issuer of this credit note and the other bank involved would have been the international bank Nederlanden Groep, for its followings in Dutch (ING).
Letters of credit are issued by a bank to another bank, to guarantee by a series of conditions that the seller receives his payment and that the buyer on the other hand, receives the shipment.
This process would take a great amount of time, a lot of bureaucracy, an extreme amount of records on paper and without counting the exchange of sensitive information between the parties involved. This transaction would have required about 10 business days of hard exchange of papers and information, but with the implementation of the new blockchain technologies it only took them 24 hours.
As we know, the blockchain technology is the indicated one to simplify and improve this process.
In a press release, HSBC said:
"The transaction was an end-to-end exchange between a seller, a buyer and their respective two banks (HSBC and ING), which was completed in a shared digital application, instead of the use of multiple processes ... It was the first transaction of large-scale live commercial financing using blockchain technology "
For this transaction, HSBC relied on the platform developed by the R3 consortium, called Corda.
R3 is working with a consortium of banks to find solutions to the requirements of more speed in their transactions. Where Vivek Ramachandran the head of growth and innovation at HSBC expresses the following:
"With blockchain the need for exchange and verification of papers is eliminated because all the parties are connected to the platform and the updates are made instantaneously ... The rapid change could mean releasing liquids to the companies"