Standard Chartered Bank will begin piloting a trade finance solution powered by blockchain technology, reports said Friday (March 31).
The Hong Kong operations of the bank are leading the DLT Trade Finance Working Group, formed under the Hong Kong Monetary Authority’s Fintech Facilitation Office. Reports said the bank has delivered a proof of concept to use blockchain in trade finance, developed in collaboration with the Bank of China, Bank of East Asia, Hang Seng Bank and HSBC and Deloitte Touche Tohmatsu, reports said.
With a proof of concept (POC) delivered, the group will begin testing the solution, which, it said, will target cost reduction, increased transparency, real-time data updates and other benefits to the trade finance industry.
“We see significant potential in the application of smart contracts in trade finance and will continue to work with industry partners and regulators to make this a reality in the near future,” said Gautam Jain, global head, digitization and client access, transaction banking at Standard Chartered.
The bank added that standardization will be critical to successful implementation of distributed ledger technology in the trade finance arena.
“In the POC, we proved DLT could facilitate information sharing among different entities while presenting client privacy and confidential business information,” stated Standard Chartered Head of Country Technology Management in Hong Kong Tommy Fung. “Furthermore, DLT could mitigate fraud-related risk and improve processing time significantly. We see this as an opportunity to break the traditional silo and to develop the standard together with other industry players.”
Reports said the group’s next step will be to invite clients and intermediaries to join pilot testing of the solution. Standard Chartered has identified entities including banks, regulators and logistics service providers as potentially benefiting from a blockchain-based trade finance tool like theirs.