HSBC – The British Multinational for Banking and Financial Services is all set for using the blockchain technology in live trade finance transactions and the bank might be announcing a series of pilots, based on the existing Proof of Concept (PoC), in the coming weeks.
As reported by Global Trade Review, the bank’s senior innovation manager Joshua Kroeker said that having diligently worked over past two years, the bank is “confident enough to actually do a live transaction.”
HSBC has earlier worked on a blockchain project for trade finance which mirrors the letters of credit using the Distributed Ledger Technology (DLT). The bank has been working on this project since 2016, and till now, it has been working at the backend for improving the solution’s security and robustness such that it is easy and comfortable to be used by the customers.
Kroeker told the media that “Going from that PoC in 2016, we’re at the tipping point of getting our customers involved in live transactions in the coming weeks and months. The technology has come a long way, we’re much more comfortable with its security and scalability.”
He further added: “That’s the stage we’re at now, we want to get the customers involved to do those [pilots]. The next stage after that, in getting it live into production, is a further amount of work around the application but more work on the network.”
Several clients of HSBC have already started digitizing their operations, but the letter os credit is one area where the bank is facing major challenges, said Kroeker. He also said that the documentary credit will be the area of primary focus for the bank.
“I’ve spent a large amount of time over the past two years speaking to lots of our largest trading clients. For the most part, they have worked very hard to streamline and digitize their operations where possible, but the product that gives them the most trouble is the documentary credit. This product is one of the first we’re going to pilot, which is going to be exciting,” he said.
The bank is currently inviting and integrating several customers into its pilot programs. However, in order to completely develop the platform and the solution and make it ready for commercial use, the bank has to work majorly on the network for all transactions to be completed on the blockchain.
Kroeker said: “We see that developing throughout the year so that in 2019, around the same time, we should be in a position to have both the network of banks, corporates and others, and the app ready to use on a wider scale.”