Banking News

Two Chinese banks expand trade finance blockchains internationally

container ship trade

Today the Chinese press published reports that two of the major state-owned banks are expanding their separate trade finance blockchains internationally. China Construction Bank (CCB) is moving into Taiwan and ICBC is partnering in Africa. There are four big Chinese state-owned banks, and these are two of them.

According to the Forbes Global 2000, ICBC is the biggest company in the world ($3.9 trillion assets) and CCB is third ($3.25 trillion assets).

The key benefit of using blockchain for trade finance is to share the digitized invoices and trade documents, cutting down on paperwork and reconciliation. But just as importantly, documents are digitally signed when uploaded to a blockchain, making fraud harder. Most trade finance networks in which big banks participate are private blockchains which only grant access to permissioned members.

In the case of CCB reports claim that its cumulative trading volume to date is 660 billion yuan ($92 billion). That likely makes it the largest enterprise blockchain in the world in terms of transaction value. In July, Taiwan’s China Trust Commercial Bank (CTBC), the country’s biggest bank, joined the trade finance network. CTBC is also a member of the International Letter of Credit blockchain consortium formerly known as Voltron.

And today’s news is that China Construction Bank demonstrated the application to two other Taiwanese banks, Taipei Fubon Bank and Cathay United Bank.

The CCB blockchain has 40 domestic banking partners, including state-owned banks. The latest iteration was launched a month ago, and one of the new features was cross-chain interoperability with other trade finance networks. Core functionality includes domestic letters of credit, forfeiting and international factoring.

Turning to ICBC, the firm has filed no less than 41 blockchain patent applications. It has now partnered with Standard Bank of South Africa which has activities across most of Central and Southern Africa. Today in Shanghai at the China-Africa Trade Conference, the two banks unveiled a joint initiative targeting African exporters. The first transaction was a bank guarantee for two billion Ugandan dollars ($540,000).

Standard Bank is also a participant in the Marco Polo trade finance network.