HSBC launches blockchain technology for banking transactions

HSBC Malaysia CEO said the next phase for the new technology is to start its commercialisation by helping clients to use blockchain


HSBC Bank Malaysia Bhd is planning to commercialise blockchain technology in Malaysia after the successful execution of its first live pilot blockchain Letter-of-Credit (LC) transaction.

HSBC Malaysia CEO Stuart Milne said the next phase for the new technology is to start its commercialisation by helping clients to use blockchain.

“The next stage is to partner a certain number of customers in different jurisdictions around the world and just run some live transactions, so working with the central banks in those countries and running some real transactions through blockchain is what our global team is working on,” he said to The Malaysian Reserve yesterday.

Milne encourages more Malaysian banks to come onto this platform as it will mean a much faster adoption of this type of technology.

“We are working not just with HSBC affiliate banks but also with other banks because we want to bring them into the whole platform which will give them a much wider application and a much faster adoption of the technology,” he said.

HSBC Malaysia head of global trade and receivables finance Debbie Mak said more commercialising will happen next year but the full market adoption of blockchain will take several years.

“We need a wider market and industry participants. Right now, with the first transaction, we have already included electronic bill of lading transfer, so the shipping company is involved. Hopefully, we can widen up the shipping company participation.

The first live pilot blockchain transaction involved the import of resin by Malaysia’s Simply Packaging Sdn Bhd from a Singaporean company, both active players in the packaging and chemicals industry respectively.

HSBC Malaysia was the issuing bank and HSBC Singapore was the nominated bank. This marks a significant step for Malaysian companies in trade digitalisation that makes doing business simpler and faster by reducing transaction times and brings in working capital efficiency.

The use of blockchain also helps increase trade velocity, especially in short shipping routes like the crossborder trade between Malaysia and Singapore.

HSBC Malaysia commercial banking, MD Andrew Sill said this is the latest in a series of roll-outs and investments made by HSBC in trade finance that will make business transactions much sharper and easier to use for its customer base.

Sill said Asean is a very important market for HSBC as the intra-Asean trade is worth nearly US$600 billion (RM2.51 trillion) while the trade between Singapore and Malaysia is worth around US$85 billion.

“There are markets with very short shipment time, so it’s incredibly important for us to see blockchain roll-out in Asean as it is going to be fundamental to our business and will make a real difference to our customers,” he said.

Historically, blockchain involves large corporations but Sill lauded the move of using the platform with an SME (small and medium enterprises) instead.

“The company’s business banking is an important segment for us, this is where we are going to see a lot of our growth coming in future years.

“I am personally very proud and I think the bankers are very proud the first blockchain transaction we do in Malaysia is with an SME,” he said.

HSBC has three customer segments which are large corporates, international subsidiary banking and business banking.