Page 15 - June 2018 Disruption Report Flip Book

BLOCKCHAIN ADOPTION
JANJUNAERY20210818
Commericial financing pilot: HSBC and Cargill
On May 14 UK’s HSBC and U.S food and agriculture group Cargil, completed the world’s first commercially viable trade finance transaction, using R3’s Corda scalable blockchain platform. The blockchain transaction involved a bulk shipment of soybeans from Argentina, through Geneva’s trading arm of Cargill, to Malaysia, through Cargill’s Singapore subsidiary as the purchaser. A Letter of Credit was issued using Corda by HSBC to ING. The two banks were acting on behalf of the Cargill entities. The transaction demonstrates that blockchain as a solution to trade digitization, is commercially and operationally viable.
“What this means for businesses is that trade finance transactions have been made simpler, faster, more transparent and more secure,” said HSBC’s Vivek Ramachandran. “The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous. The quick turnaround could mean unlocking liquidity for businesses.”
“The tests ING ran as part of the proof-of-concept enabled us to see the value this solution could deliver in three separate areas of trade financing. The technology ran fast and smoothly and the positive results showed us we are on the right track and ready to take the next step by entering into a pilot,” said Ivar Wiersma, head of innovation at ING Wholesale Banking.
“Cargill believes blockchain can help our company nourish the world in a safe, responsible and sustainable way,” said Cargill’s Rani Misra. “Therefore, it’s a key technology we are exploring and using with our own customers and, now, using for ourselves with the completion of this transfer on Corda. Simply put, we took a highly manual, complex transaction and made it more secure and efficient. We see the exciting potential of extending this technology into other areas of our financial ecosystem.” (Blockchain for Dummies, Manav Gupta, 2017; Press Release, HSBC, 05/14/18)
Trade and real estate finance
Businesses need to streamline the process of obtaining approvals from multiple legal entities— including customs, port authorities, trucking or rail transportation firms—for the movement of goods across borders. The blockchain can be used by the legal entities to sign all approvals and keep all parties informed of the approval status, date goods will be received, and date payment transfers from the importer’s to the exporter’s bank will occur. The benefits for trade finance include the following:
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