HSBC Holdings plc (ADR) (NYSE:HSBC), together with ING Groep NV (ADR) ADR (NYSE:ING) announced that the two have successfully applied Corda blockchain technology to complete a trade transaction involving Cargill, a food and agricultural group. The two companies used blockchain technology to complete a shipment of soy beans from Argentina to Malaysia.
Adoption of blockchain in mainstream financial systems
The new development is a big signal that blockchain technology is finding its way into mainstream financial systems. HSBC announced that this is the first commercially viable and successful trade-finance transaction completed using blockchain technology.
The rise in the adoption of blockchain technology in the banking industry is motivated by the need to reduce fraud cases in transaction and reduce bureaucracy in completing transactions.
The global head of innovation and growth for commercial banking at HSBC Vivek Ramachandran said that this is a big milestone for the company and by extension, the entire banking and blockchain industries. He said that blockchain helps cut a lot of paperwork during transactions.
Corda was developed by R3, which is a technology group. It was developed to offer a financial grade distribution ledger which operates with privacy in an open, global network.
Many companies and industries are increasingly turning to blockchain. Blockchain plus its distributed ledger technology helps to reduce paperwork as well as the time it takes to process a trade finance transaction. HSBC is optimistic that more parties will be attracted to sign up to use the new technology in executing trade finance as well as other transaction-related functions. Last year, HSBC recorded $2.52 billion in revenue from trade-finance, positioning itself as one of the largest banks globally.
Last year, reports emerged that a group of seven big banks were jointly working to develop a platform system for syndicated loans that would use blockchain. Some of the banks in the group are BNY Mellon, ING and HSBC. State Street and BNP Paribas are also among the financial institutions involved in the project. The underlying technology supporting the platform will be provided by Finastra and blockchain consortium R3.