Banks Ink Blockchain Trade Finance Transaction with Food Giant Cargill

The use of blockchain by banks like HSBC will reduce the risk of fraud in banking. Kin Cheung  AP

The LOC backed a shipment of soybeans to Malaysia from Argentina last week. The Cargill exchange was done using Corda Blockchain, a platform developed by the R3 consortium which HSBC and ING are both a part of.

While there have been several instances of proof-of-concept transactions performed using the blockchain, this one between HSBC and ING is the first that indicates its commercial applications, a spokesperson said to CNBC.

Traditionally, these transactions take between five and 10 days to complete and typically require numerous paper records that need to be signed by all parties involved.

The companies exchanged the information needed for the letter of credit in 24 hours, the banks said.

The three players most likely to leave Manchester United this summer
I've been at this club, and it is such a great club, so I obviously know the club and the manager. "He's injured", he said. He will join the backroom team in the summer but not, for now at least, as a like-for-like heir to Rui Faria.

HSBC successfully completed the trade transaction for USA food and agriculture firm Cargill.

It was an end-to-end transaction that was carried out on a shared digital application between the buyer, seller, and the banks involved. HSBC's pioneering use of blockchain shows the potential for this nascent technology to revolutionise many aspects of the financial sector beyond cryptocurrencies.

Despite their general hostility towards cryptocurrency industry, a growing number of banks have started embracing its underlying technology-the blockchain.

"With blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous". It hopes the technology will mean trade finance deals can be made simpler, quicker, more transparent and more secure.

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The transition of systems and data will be overseen by an unnamed independent third party that is based in Switzerland. In fact, its Global Transparency Initiative was announced in October previous year in response to the allegations.

However, before it can progress further with integrating blockchain into worldwide trade, HSBC needs more banks, ports, shipping companies and customs operations to adopt similar collaborative technology platforms. It was developed by R3, a blockchain consortium based in NY.

Referring to a study by the United Nations, HSBC said that switching to an electronic system could reduce the time it takes to export goods by up to 44 percent and lower costs by up to 31 percent.

Ivar Wiersma, Managing Director, Innovation Wholesale Banking, ING, said: "It's exciting to see this transaction has been completed successfully with clear client benefits in speed and ease in execution".

R3, along with supporting banks, is now looking to expand the use of the network as a utility for the trade finance sector. Corda is supported by 12 banks and this will hopefully allow it to bring the technology to market quickly and on a global scale.

HP's ENVY Curved AiO 34 gets sleek new design and Alexa
HP rates this model for up to 12 hours and 45 minutes of usage, which we look forward to testing with the Laptop Mag Battery Test. HP will sell the EliteBook 1050 G1 in the USA later this month with a starting price of $1,899 (approximately Rs. 1,28,300).

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