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HSBC Blockchain Connection Reduces Transaction Time by 40%

Global banking giant HSBC has tested out its blockchain-based trade finance platform Voltron and reduced transaction time by 40%.

Global banking giant HSBC has tested out its blockchain-based trade finance platform Voltron and reduced transaction time by 40%, the Chartered Institute of Procurement & Supply reported on July 10.

To arrange a shipment between Hong Kong and Dubai, HSBC partnered with major retail organization Landmark Group which provided its blockchain platform ReChainMe. The companies linked up their respective platforms, which reportedly resulted in the reduction of transaction time by 12 days, or 40%.

Sunil Veetil, regional head of trade at HSBC MENA and Turkey, said that blockchain-based platforms will provide businesses a competitive advantage by increasing trade speeds. HSBC reportedly stated:

“Having the two platforms seamlessly connected meant all parties in the supply chain ecosystem were able to track and view the progress of the transaction, agree on the terms of the transaction including logistics, co-create and approve documents and fast track supplier payments, all in real time.”

In February, HSBC revealed that its blockchain-powered platform cut costs for foreign exchange trade settlement by a quarter. The platform — based on a distributed, but permissioned, ledger — reportedly allowed HSBC to coordinate payments in real time across its trading hubs in the Americas, Europe and Asia Pacific.

Béatrice Collot, Head of Global Trade and Receivable Finance at HSBC, previously argued that transparency and instantaneity are the main strengths of blockchain technology. According to Collot, blockchain will transform global trade finance by bringing together stakeholders and allowing information to be shared in a more transparent way.

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HSBC Seeks Banking Partners in South Korea to Launch Voltron Blockchain Platform

UK-based banking giant HSBC is seeking Korean banking partners to expand the R3-backed blockchain platform Voltron to the region.

United Kingdom-based banking giant HSBC is seeking banking partners in South Korea to deploy the blockchain platform Voltron in the country, Korean news outlet The Korea Times reports on Tuesday, March 12.

As reported, Voltron is a platform that enables companies to process and settle their trading invoices via blockchain. The solution was launched in October 2018 by blockchain consortium R3 and eight banks — including HSBC, ING and Standard Chartered — and is currently at the pilot stage.

HSBC’s Innovation Director on Blockchain Joshua Kroeker, cited by The Korea Times, says that the company is planning to launch Voltron commercially in the near future. HSBC wants to establish ties with Korean banks to collaborate on the development of the platform and share costs.

Kroeker believes that the decentralized system can significantly reduce the time generally required for interbank operations and facilitate connections. “The biggest impact would be time. Time and transparency will help companies better manage their cash flow and working capital,” he told reporters, adding:

“I am here this week to reach out to Korean banks to collaborate on this blockchain platform for letters of credit.”

The Korea Times noted that filing and processing trading papers normally takes five to ten days, but can in fact last up to 30 days. As the publication notes, a decentralized system could help reduce this time to 24 hours, as blockchain enables different parties to have access to the data in real time.

Earlier this year, Béatrice Collot, Head of Global Trade and Receivable Finance at HSBC, paid special tribute to blockchain, saying that the technology has the potential to converge the two main ecosystems involved in trade finance — the financial ecosystem, which includes banks and suppliers, and the supply chain ecosystem. She mentioned transparency and instantaneity as the true strengths of blockchain.

In February, HSBC revealed that its proprietary blockchain solution FX Everywhere had cut costs for foreign exchange trade settlement by 25 percent. However, the company clarified that the blockchain-powered settlements represented a small proportion of the total.

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SWIFT, HSBC, Deutsche Bank to Conduct Blockchain-Based E-Voting PoC

Global financial messaging network SWIFT is carrying out a DLT-based shareholder e-voting proof-of-concept in the first half of this year.

Global financial messaging network, the Society for Worldwide Interbank Financial Telecommunication (SWIFT), is carrying out a blockchain-based shareholder e-voting proof-of-concept (PoC) with major financial institutions. SWIFT announced the news in a press release published on March 6.

Per the press release, the PoC will be jointly conducted in the Asia Pacific region with Deutsche Bank, DBS, HSBC, Standard Chartered Bank, securities software provider SLI and the Singapore Exchange (SGX). The test is meant to establish whether distributed ledger technology (DLT) can simplify the management of shareholder meetings.

More precisely, the test, which is set to run during the first half of 2019, is meant to accomplish four main goals, the press release explains. First of all, it is designed to test the deployment of a voting solution in collaboration with the issuers and a Central Securities Depository (CSD) while storing and managing data on a permissioned private blockchain.

Secondly, the PoC also seeks to demonstrate the viability of hybrid solutions “combining messaging and DLT to foster interoperability and avoid market fragmentation.”

The initiative will also test SWIFT’s capacity to host third-party applications in its DLT environment and reuse its security and interface stack.

Lastly, the PoC looks to confirm the use of a particular financial electronic data interchange standard — ISO 20022 — in the process.

While DBS and SGX will be both participants and issuers in the initiative, HSBC, Deutsche Bank, and the Standard Chartered Bank will be only participants. According to the release, the whole project will be facilitated by SWIFT’s DLT sandbox testing environment.

Additionally, the existing SWIFT network and infrastructure will be used to access, test and validate the applicability of the technology.

The press release quotes a SWIFT executive as saying:

“The emergence of blockchain technology is a new opportunity to look at improving these [current] processes. It is also an opportunity for SWIFT to offer flexibility in the adoption of this new technology through the re-use of ISO 20022 based solutions together with a high level of security and resilience that our industry requires.”

As Cointelegraph reported at the end of January, SWIFT has revealed that it plans to launch a PoC of a gateway — dubbed GPI Link — that will allow enterprise blockchain software firm R3 to link to GPI (Global Payments Innovation) payments from its platform.

Also at the end of January, reports surfaced that Iran was planning to unveil a state-backed cryptocurrency meant to skirt United States sanctions and the SWIFT system at the Electronic Banking and Payment Systems conference in Tehran that week, though the currency was not officially announced.

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94 Companies Join IBM and Maersk's Blockchain Supply Chain

IBM and shipping giant Maersk have recruited a sturdy crew for their global trade blockchain platform.

Revealed Wednesday, the companies have already signed up more than 90 firms for the platform since it was spun off from Maersk in January. They have also finally given it a name: TradeLens.

Leveraging Maersk’s leviathan-like scale, TradeLens has attracted a wide variety of entities, ranging from dozens of port operators and customs authorities to logistics companies and even rival ocean-going carriers, such as Pacific International Lines, all of whom have been testing the platform.

The pilot stage now complete, TradeLens is available for participation through an early adopter program and is expected to be fully commercially available by the end of this year. 

And to drive home the message that TradeLens is an open and neutral platform, IBM and Maersk have updated their marketing strategy, now describing the project as “joint collaboration” rather than a joint venture.

“At the time of the launch, we wanted to be clear that we were not offering a bespoke Maersk- or IBM-only solution,” Michael White, head of global trade digitization at Maersk, told CoinDesk 

While Maersk and IBM remain the only two shareholders, and both invested in the technology and jointly own the IP, White emphasized it is completely open to ecosystem participants.

“It was never about a joint venture,” he said, although the Maersk press release for the launch described it as such.

But an IBM spokesperson said the original 49/51 percent ownership split will no longer apply under the collaboration model the two are now going to market with, in response to feedback from the industry.

Both IBM and Maersk will sell access to the TradeLens platform. The selling party will contract with the customer and receive all the fees and revenue rather than sharing it with the other partner, the IBM representative added.

This new model allows them to bring the solution to market faster, and be more flexible than the previously planned joint venture model, the spokesperson said.

Common tongue

TradeLens is built on the IBM Blockchain platform, which uses the open source relative of Linux, Hyperledger Fabric, and this presents a possible interplay with other IBM and Hyperledger projects.

“We have architected all of these solutions so that it’s very easy for data to be exchanged between the two different blockchains – take TradeLens and IBM Food Trust for example – if clients were to be inclined,” said Todd Scott, the vice president of global trade at IBM Blockchain.

To help foster this open supply chain ecosystem, TradeLens is pushing its open APIs for shipping as well as work being done with shipping standards bodies such as CEFACT and industry groups such as OpenShipping.org.

“On top of the bedrock of blockchain technology we are working with standards, and also have 125 or so APIs, and we are going to give all that access to the developer community so they can even create additional technologies of their own on top of it, ” said Scott.

However, not everyone will see this as such a great and gregarious invitation to the industry.

“It’s fine for them [IBM and Maersk] to say ‘we are open for everyone to join,’ but all they are really saying is ‘come and use our system,'” said Sean Edwards, chairman of the International Trade and Forfaiting Association.

Edwards, who is also head of legal at Sumitomo Mitsui Banking Corporation Europe, said getting everybody to speak together is not a new problem and the answer, he said, has been to try and create ecosystems like Universal Trade Network (UTN), only they haven’t really got off the ground yet.

Referring to other blockchain solutions aimed specifically at banks to optimize trade finance (which is related to but different than the supply chain processes TradeLens is digitizing), Edwards said the situation may become one where, just as consumers have a multiplicity of passwords and systems that we use, banks and other entities may have to be present on a number of different platforms.

“Either there are common enough standards that all the different underlying technologies can actually speak to each other, or you have initiatives that are so big everybody uses it,” said Edwards, adding:

“I don’t think somebody like Maersk is going to solve that.”

Courting HSBC

And notably, TradeLens is not the only boat in this race.

In addition to the well-established supply chain payments platform TradeShift, which connects over 1.5 million companies across 190 countries, banking giant Citigroup is in stealth with a combined trade finance and supply chain platform which will leverage not only distributed ledger technology (DLT) but also the internet of things (IoT) and artificial intelligence.

Hence, TradeLens is at pains to come across as neutral and therefore appeal to the widest possible audience.

Speaking to potential data privacy concerns for companies that compete with Maersk’s subsidiaries, White said the Maersk side of the collaboration team is a distinct and separate entity with no involvement with the commercial activities of either Maersk Line (the shipping container business) or Damco (the logistics provider).

On top of these Chinese walls, the platform itself features privacy protections, White said. “Sensitive information from other carriers are kept on separate nodes, so Carrier A cannot see Carrier B ‘s information or carrier C’s information,” he said.

Looking ahead, another possible blockchain interoperability play for TradeLens would be some of the trade finance blockchain platforms built on IBM Blockchain and Hyperledger, such as we.trade and Batavia.

Although it’s probably still rather far off in the future, you could imagine an all-encompassing platform, so that if radio frequency identification (RFID) trackers indicate physical proximity to something, a payment can be released or a document signed, or similar.

On the subject of trade finance, IBM said banks were present among the 92 TradeLens pilot partners, but these were not being named. However, CoinDesk learned from a source in the trade finance arena that HSBC has “met with TradeLens a couple of times and agreed to reconnect post-launch.”

And both IBM and Maersk agreed a world of opportunity awaits with regard to bringing trade finance banks, marine insurers and the like on to TradeLens as the platform takes to the waves.

Maersk’s White concluded,

“We have found is there are number of industries and institutions including financial institutions and insurance companies, that are looking to take advantage of this platform.”

Shipping container image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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IBM-Powered Blockchain Platform Completes First Live Trades Via Five Major Banks

European blockchain trading platform we.trade confirmed it had completed its first live operations today, July 3, involving twenty companies and five major banks.

The blockchain platform, which claims to provide a “more efficient and cost effective way” for banks and businesses to trade worldwide, uses IBM’s Blockchain Platform, powered by Hyperledger Fabric.

Part of various blockchain solutions currently under appraisal by the banking sector, the platform counts Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale and UniCredit as its founding members.

Together, according to Dutch institution Rabobank, the collaboration highlights the banks’ ability to “innovate.”

“These trade(s) represents a great example of traditional banks innovating to meet their clients’ needs by working with we.trade,” the bank’s chief digital transformation officer Bart Leurs commented in a press release.

Currently available in eleven European countries, the platform’s expansion plans appear to depend on further lenders coming on board.

Meanwhile, bank-sponsored blockchain platforms are becoming an increasingly crowded space both in Europe and beyond. Spain’s Santander became the first to offer blockchain settlements for retail customers using Ripple in April, while remittances also form the basis for a major project between banks in Asia, also involving technology from IBM.

At the same time, other plans appear to have fallen by the wayside, Rabobank remaining silent on its ‘Rabobit’ cryptocurrency wallet project since March.

As Cointelegraph reported in June, some sources fear banking demand for blockchain services is overrated, and the technology actually has less to offer to the sector than many assume.

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HSBC Exec Warns 'Digital Islands' Could Inhibit Blockchain Trade

When HSBC’s Vinay Mendonca thinks about how distributed ledger technology (DLT) will reshape global trade, he sees two scenarios – one inspiring, the other dispiriting.

In the best case, blockchains and other digital platforms should do for the global value chain what shipping containers did for the physical transportation of goods. Just as the standardized dimensions of containers allowed them to move around the world easily from ship to rail to truck, DLT with data standards and interoperability ought to create seamless flows of value.

But without such standards, trade finance could end up on “digital islands,” or silos disconnected from each other, said Mendonca, the global head of product and propositions for global trade and receivables finance at HSBC. And he believes that would do no one much good.

It’s perhaps not surprising HSBC is thinking about interoperability; the bank has a finger in just about every trade platform of note.

HSBC was the first bank to partner with and invest in Tradeshift, the digital trade platform which boasts 1.5 million suppliers in 190 countries (Goldman Sachs led a further $250 million funding round earlier this week).

HSBC has also gone well past the proof-of-concept stage, completing the world’s first blockchain-based trade finance transaction with food giant Cargill and R3’s Corda platform. Further, it’s a key member of the We.Trade consortium which uses Hyperledger Fabric – and that’s not including a number of Asia-specific consortiums and projects of which it’s part.

To Mendonca, it’s important to bring the interoperability discussion to the table as early as possible.

He told CoinDesk:

“A fundamental challenge for all of us is to make all this fit together. So, how do we make sure the Cargill solution on Corda has interoperability with the national trade platform in Singapore, as an example?”

Hence, an “international set of standards that everybody complies with” is needed, Mendonca said.

Setting standards

Stepping back, the HSBC executive’s concern for how to connect various platforms grows out of a realization that trade finance cannot be digitized in isolation.

It has to be about the total digitization of trade: issuing purchase orders, accepting invoices, shipping goods. Within that merging of physical and financial supply chains, clients can have a discrete step for a financing option, said Mendonca, “so not a completely different process, but really have that embedded within the existing process.”

Would that it were so simple.

One problem is that construction of much of this architecture is at the R&D stage and so different initiatives and splinter groups are inevitable.

Mendonca said it is difficult to call how things will progress, but he guessed there could be some consolidation happening before too long.

“Some working groups may merge with others that are more advanced,” he said, adding that he now only gets excited by projects that can scale for real, as opposed to PoCs done in a lab or a sandboxed environment.

Returning to the question of standards, Mendonca touched on some practicalities whereby the industry needs to decide, “are these the standards we will all accept on an invoice, on a purchase order?”

Then, if that can be achieved, “what technology you use to make it happen is probably slightly less of a problem.”

Agreeing on the standards is likely the bigger challenge, he said:

“We will have to pull together as an industry to make that happen and it’s not going to be easy. But to be fair, I think this time around, every working group realizes that it has to be a building block; interoperability shouldn’t be an afterthought.”

Collaboration or competition?

This all sounds great, but it’s well known that big banks are touchy about sharing anything that could give their competitors an edge.

As well as being careful about data sharing, using platforms like Tradeshift that are essentially “bank-agnostic” means valued customers engage with multiple banks.

However, Mendonca pointed out that HSBC has actually been doing this type of thing for years with the SWIFT for Corporates channel, a service provided by the international financial messaging network for treasurers of multinationals.

“Its big benefit is being bank-agnostic, ” he said. “For instance, you don’t have to connect to five different banks; you connect once and you can give an instruction to all those five banks. So stuff that was put in place a while ago for cash is now available for trade.”    

The intuitive play in a more distributed world, then, is to define which factors banks need to collaborate on, and those they compete on. They can agree there’s a need to collaborate on the exchange of purchase order and invoice data, for instance, because this will make customers’ transactions more efficient.

On the other hand, HSBC would compete with others on the reach of its network to support transactions across the globe, Mendonca said, or the advisory capability of its trade experts and the service levels it offers.

As such, HSBC is not intimidated in any way by other big banks joining it on any particular platform, said Mendonca, concluding:

“We have been offering supply chain finance solutions to clients for years. When they tell us they are looking at a bigger picture, we understand these end goals.”

HSBC bank image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Banks Ink Blockchain Trade Finance Transaction with Food Giant Cargill

Banking and financial services giants HSBC and ING have completed a trade finance transaction for agri-food trading company Cargill using a single blockchain system.

Claimed as a “world first,” Reuters reports, the live commercial trade finance transaction saw an export of a shipment of soybeans from Argentina to Malaysia, during which Cargill Geneva sold the goods on behalf of its Argentine arm team and Cargill Singapore received them on behalf of the Malaysian arm of the firm.

HSBC said that while other trade finance deals have been carried out using blockchain together with other technologies, the Cargill trade was the first to use a single blockchain application, the report indicates.

According to news source GTR, the transaction was carried out using a letter of credit tool within R3’s distributed ledger technology (DLT) platform Corda.

The letter of credit involved was issued by HSBC, while ING served as the advising bank, and the process was slashed to 24 hours from the paper-based standard of 5-10 days. While the letter of credit was exchanged over the blockchain, while bill of lading and other transaction elements were not, the report adds.

Following the successful transaction, HSBC is focusing on more live tests and ultimately aims to promote the system for industry-wide adoption, Vivek Ramachandran, global head of innovation at HSBC Commercial Banking, told GTR.

“We’ve still got a few more steps to do before we get to widespread adoption,” he was quoted as saying.

The news comes after HSBC revealed its plans in February to launch several pilot programs based on existing proof-of-concept (PoC) projects.

“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,” the bank’s senior innovation manager Joshua Kroeker, said at the time.

Shipping containers image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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HSBC Completes ‘World’s First’ Blockchain Trade Finance Deal, Ships Soybeans

UK-based banking giant HSBC has reportedly completed the world’s first ever trade finance transaction powered by blockchain, the Financial Times (FT) reported today, May 14.

As multiple news outlets report, HSBC, which is the world’s largest trade finance institution, completed a letter of credit for food and agricultural giant Cargill, the US’ largest private company in terms of revenue.

The deal in fact processed last week and involved a shipment of soya beans from Argentina to Malaysia.

The success of the trial transaction means there is potential for blockchain to take hold in the global trade finance market, which is reportedly worth $9 tln, FT reports.

“We don’t envisage the platform as anything other than a utility,” the FT quotes Vivek Ramachandran, head of innovation and growth for commercial banking at HSBC as saying in a statement.

That “utility” could however ultimately involve some of the world’s largest corporations looking to save on processing costs and improve security over paper-based deals.

HSBC had been looking into the technology’s role in trade finance for at least a year, partnering with the Hong Kong’s central bank on a proof of concept in March of last year.