HSBC global banking subsidiary has completed the country’s first blockchain-based letter of credit transaction on the Contour DLT platform.
The agreement was used to settle the import of 20,000 tons of heating oil from United Mymensingh Power’s Singapore subsidiary.
Mahboobur Rahman, chief executive of HSBC Bank Bangladesh, described the deal as evidence of the bank’s commitment to “support cross-border trade for Bangladeshi companies using advanced technology platforms”.
“I believe this will open a new era of international business transaction guidance as companies and governments realize transparency, security, and speed of implementation using blockchain technology.”
SWIFT Global Payment Service estimates that Bangladeshi transactions or letters of credit in the first half of 2020 amounted to more than $ 34 billion.
With blockchain technology, the time it takes to process a transaction has been reduced from five to ten days to less than 24 hours. United Group CEO Moinuddin Hassan Rashid said:
“Fuel oil fluids are very time sensitive, so every second counts, and we believe this blockchain technology will help manage time efficiently, as well as provide increased efficiency and better cost management.”
Contour is a blockchain platform built with R3 Corda that connects financial institutions and corporate structures to the ‘decentralized trade finance network’.
Contour is owned by eight financial institutions, including HSBC, ING, Citi, Bangkok Bank, BNP Paribas, Standard Chartered, SEB and CTBC. Development of the platform began in mid-2017, when it was dubbed “Voltron”, and the following year it was launched in a closed beta.
Eighty different organizations from 17 countries tested Contour before launching a commercial beta in early 2020, and the platform finished beta testing just a month ago.
Contour was also used to settle 176,000 iron ore transactions between Malaysia and China, with the Asian Development Bank in the Philippines also using the platform to complete the first cross-border LC transaction on the Vietnam and Thailand blockchain.