HSBC Bangladesh is the first company in the country that has completed a blockchain-powered cross-border trade settled entirely using a letter of credit. The Bangladesh branch of the global banking firm has done the blockchain-based letter of credit (LC) transaction on the Contour DLT platform.
That transaction was used to pay for the importation of 20,000 tonnes of fuel oil from the United Group’s Singapore subsidiary known as United Mymensingh Power. Md Mahbub ur Rahman, HSBC Bangaladesh’s chief executive, said that this transaction showcased the bank’s commitment to supporting massive cross-border trade using top-notch technology platforms.
“I believe this will usher in a new era of routing international trade transactions as businesses and governments recognize transparency, security, and swiftness in performing tasks using blockchain technology.”
SWIFT Global payments service projected that Bangladeshi trades using LCs were worth over $34 billion in the first half of 2021. By using blockchain technology, the time taken to process the transaction was cut down from 5-10 days to less than 24 hours. Moinuddin Hasan Rashi, United Group’s managing director, stated:
“Fuel oil LCs are highly time-sensitive where every second counts and we believe this blockchain technology will help to manage time efficiently and also ensure increased efficiency and better cost management.”
By description, Contour is a blockchain platform that is built using R3’s Corda. It is designed to connect financial institutions and corporate entities in a “decentralized trade finance network.” Eight financial institutions own Contour, including BNP Paribas, Standard Chartered, HSBC, ING, CTBC, Citi, SEB, and Bangkok Bank.
Growth And Development Of Contour
The platform’s development started in mid-2017, and at that time, it was named ‘Voltron’ before launching in closed beta the following year. A total of 80 different entities operating from 17 countries have already tested the Contour. Successful testing led to its commercial beta launch at the start of this year. Notably, the platform exited beta just a month ago.
Contour has also been used to pay for a 176,000 iron ore trade executed between China and Malaysia. Also, the Philippine-based Asian Development Bank used the platform to execute the first cross-border blockchain LC transaction between Thailand and Vietnam. More use cases are coming up that enable blockchain technology, and subsequently, cryptocurrencies, gain mass adoption around the world.