HSBC Bets on Blockchain to Improve Global Trade, Seeks Ties With Korean Banks

Bhushan Akolkar
By Bhushan Akolkar
Posted on March 12, 2019
HSBC Bets on Blockchain to Improve Global Trade, Seeks Ties With Korean Banks

Blockchain Technology is the next big platform transforming global baking and trade, and it seems that financial giant HSBC knows it well. Identifying potential growth in the blockchain sector, HSBC is investing heavily to bring trade transactions on the blockchain. 

HSBC’s Asia Pacific Group general manager and regional head of commercial banking, Stuart Tait said that blockchain will help massively to boost trade while making transactions much more efficient, secure, and transparent. 

Speaking to Bernama media outlet, Tait said

“We expect to handle more blockchain transactions for trade. It’s a really great area for us to focus on because we handled about 100 million pieces of paper every year just in trade finance and blockchain technology can be used to digitalise the documents”.

Commercial Launch of the Voltron Platform

In the near future, HSBC is planning the commercial launch of its Voltron platform, currently in the pilot stage. HSBC's innovation director on blockchain, Joshua Kroeker said that the bank is currently establishing important alliances with other banks and tech companies. 

Voltron is basically the project developed within the popular R3 blockchain consortium. The Voltron platform aims to leverage blockchain technology to reduce the time period of credit exchanges and trade settlements. 

The existing paper-based process for credit exchange is very lengthy and time-consuming. This is because the process involves several participants like banks, shipping companies, importers, and exporters.  

The current time-period for paper-based trade settlements takes anywhere between 10 to 30 days. Introducing a decentralized ledger system will drastically bring the time-period to below 24 hours. This is because blockchain will allow multiple parties to see the whole process and data at the same time. 

In a word with The Korea Times, Mr. Kroeker said: 

"The biggest impact would be time. Time and transparency will help companies better manage their cash flow and working capital. I am here this week to reach out to Korean banks to collaborate on this blockchain platform for letters of credit."

Note that HSBC will not completely own the Voltron platform. Rather it will be managed and governed by a consortium of banking institutions. For the development of Voltron, HSBC has partnered with global banking giants like BNP Paribas, ING, Bangkok Bank, Standard Chartered, CTBC Holding, and SEB. 

Moreover, all these banking institutions will collaborate over a “permissioned” blockchain network. Meaning it won’t be an open network and available only to legitimate partners on a need-to-know basis. 

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