A Dozen Banks Launch New eTrade Connect Blockchain Platform for International Trade Efficiency
HSBC, Standard Chartered, and ten other banks recently got together to form a platform called eTrade Connect. On Wednesday, the platform launched their blockchain-based trade finance project in Hong Kong with the hopes that it will increase the efficiency in the funding for international trade. Based on a statement from HSBC, the platform will eliminate the excess time involved with trade loan application approval.
Right now, the process of approving a trade loan application takes upwards of 1.5 days. However, with the new platform, it is possible for the same application to have a turnaround time of four hours or less. Some of the other banks that have bonded together to help with the development of the platform include the Hong Kong Monetary Authority (HKMA), the Agricultural Bank of China, and BNP Paribas.
In 2017 alone, the total volume of trade finance transactions was worth about $9 trillion. However, this entire market is based on paper transactions, and the policies in place have not changed at all in possibly centuries. The goal is that blockchain technology can be used to help streamline the process and bank it much less complicated. Right now, there are many banking institutions that are working to implement such protocols.
By bringing in blockchain, the banking industry hopes to start by reducing fraud that ends up occurring with letters of credit (LoC) and other transactions that are common with trade finance. Since everything will occur on a shared ledger, the number of steps and the amount of paperwork are greatly reduced as well.
With the digitization of trade documents, the trade finance processes can leverage blockchain for a faster result. As the platform went live, HCBS notified consumers that the first of many transactions created on the ledger came from Pricerite for supplies. Pricerite chairman Bankee Kwan, in a statement that was ultimately issued by HSBC, said,
“Blockchain has transformed a cumbersome, complex process into a simpler but more secure and efficient way of conducting trade.”
Now, the creators of the eTrade platform plan to partner up with We.Trade, a Europe-based digital trading platform. Deutsche Bank, UBS, and HSBC are all participants on the We.Trade platform, and they employ the use of similar technology.