By DASHVEENJIT KAUR / Pic By ISMAIL CHE RUS
HSBC Bank Malaysia Bhd has been engaging with local regulators to come up with a trade finance platform using blockchain technology.
After performing the first commercial trade finance transaction using blockchain last May, HSBC said it intends to get more banks to embrace the new technology.
HSBC Asia Pacific regional head of global trade and receivables finance Ajay Sharma said Bank Negara Malaysia has been very receptive of the lender’s suggestion to create a platform that all those involved in trade would want to use — from banks, exporters and shippers, to regulators and lawmakers.
“There are still significant hurdles for blockchain before it becomes an efficient and legally compliant technology, so policymakers will need to make changes to enable its use across borders,” he told reporters during HSBC’s media briefing after launching the HSBCnet Trade Transaction Tracker yesterday.
“We urge more banks in Malaysia to embrace blockchain as it has potential to upend the industry,” he added.
The commercial trade finance transaction that HSBC performed on May, 2018, covered a shipment of soybeans transported from Argentina to Malaysia.
HSBC handled the deal for US food and agricultural group Cargill Inc, in partnership with Dutch bank ING.
Both used the Corda blockchain platform developed by distributed database technology group R3, which is backed by a consortium of banks that include HSBC and ING.
The bank said transferring all of Asia Pacific’s trade-related paperwork onto the blockchain could reduce the time of exporting goods by up to 44% and cut costs by up to 31%.
HSBC added that a transaction of this kind typically takes between five and 10 days for the full exchange of documents, but that the Cargill blockchain transaction was completed in 24 hours.
Ajay said with blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous.
Blockchain, the technology that underpins bitcoin, enables transactions to be recorded across a vast network of computers.
“Trade is one particular area that stands to benefit from blockchain technology.
“And in fact, this is where HSBC has placed its main focus to date as we believe that businesses of all sizes will be able to trade faster, cheaper and more efficiently worldwide,” Ajay added.
On the newly launched HSBCnet mobile app, HSBC head of commercial banking Andrew Sill (picture) said it was designed for customers to track the real-time status of trade transactions more quickly and easily.
“It’s the first of its kind locally, whereby exporters and importers in Malaysia are given the means to track international trade transactions,” he told reporters.
The app will provide HSBC customers with a real-time view of their documentary credits, collections and payments across markets and countries worldwide.