HSBC

Global banking and financial services giant HSBC has been investing heavily in blockchain for a number of years. Dora Matheidesz, Senior Innovation Manager in the corporation’s Trade Finance division, said: “We are utilising blockchain technology across the entire bank – be it trade finance, syndicated lending, foreign exchange or securities settlement.

“We are taking a holistic perspective on how to leverage our capabilities across the bank by creating a modular blockchain ecosystem, with interoperable components, to deliver the best solutions to our clients."

Specific use cases include the world’s first use of a distributed ledger to verify a trade finance deal. In international transactions involving the movement of goods in particular, banks like HSBC still play an important third-party role, issuing Letters of Credit on the buyer’s behalf to guarantee payment will be released to the seller as soon as goods are received. Involved in around 13% of all merchandise trade transactions worldwide and worth $2.5bn a year to HSBC alone, this lucrative area of operation is still largely carried out using paper documentation and is notoriously slow and inefficient.

Teaming up with the R3 consortium and its Corda blockchain platform, HSBC issued the first fully digitised letter of credit for a shipment of soy beans sent by a subsidiary of agricultural conglomerate Cargill in Argentina to another of its companies in Malaysia. Using the blockchain, HSBC was able to reduce an end-to-end process that usually takes anywhere between five to 15 days, from submitting export documents to approving payment, to less than 24 hours.

Another area where HSBC has been proactive in using blockchain technology is in foreign exchange, or currency trading. In January 2019, the bank announced that it had processed more than three million foreign exchange transactions worth $250bn in the previous 12 months. A notable example of blockchain being used at scale, HSBC reported that the use of the technology had cuts costs by automating manual processes, and lowered incidents of errors and delays.