A shipment of soybeans was transported from Argentina to Malaysia, via Cargill’s Geneva and Singapore subsidiaries. The deal was financed using a letter of credit, which was completed digitally.
The transaction marks a tipping point in the way goods are bought and sold, HSBC and ING Bank said in a media release on Monday. They both successfully executed the first live trade finance transaction using R3’s Corda Blockchain platform for Cargill, an international food and agriculture conglomerate.
The transaction demonstrates that Blockchain is a commercially and operationally viable solution for trade digitization, the banks added. Up to this point, banks, buyers and suppliers had been experimenting with Blockchain, testing proofs of concepts and conducting internal pilots. However, this letter of credit transaction was an end-to-end trade between a buyer and a seller and their respective banking partners, completed on a single and shared digital application rather than multiple systems.
Supported by 12 Banks
What’s more, the Blockchain platform used is already being supported by 12 banks, who are working with R3 and their partners to continue the development to bring the platform to market more broadly.
«This is an inflection point for how trade is conducted. At the moment, buyers and suppliers use a letter of credit, typically concluded by physically transferring paper documents, to underpin transactions. With Blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous,» said Vivek Ramachandran, global head of innovation and growth, commercial banking at HSBC.
