Today the Hong Kong Monetary Authority (HKMA) announced the official launch of its blockchain trade finance platform eTradeConnect. It was previously known as the Hong Kong Trade Finance Platform. There are also plans to collaborate with we.trade which until now has focused on Europe.
The platform involves digitizing trade documents to automate the trade finance process. The benefits expected are greater efficiency and reduced risk from the prevention of fraud and identity theft. Ultimately the aim is to facilitate trade by increasing credit availability and lowering financing costs.
The initial version offers open account trade finance like factoring. But the aim is to expand to other forms of trade finance and beyond banking.
Howard Lee, Deputy CEO of the HKMA, said, “It is a remarkable moment to witness the birth of the first blockchain-based trade finance platform built by key industry players in Hong Kong. It demonstrates the willingness of the financial industry to adopt new technology in the new era of smart banking.”
It follows a proof of concept (PoC) started in December 2016 and completed in March last year. Deloitte ran the PoC, and Ping An’s OneConnect built the latest version with Deloitte providing consultancy.
The original seven banks are ANZ, Bank of China (Hong Kong), Bank of East Asia, DBS Bank (Hong Kong), Hang Seng Bank, HSBC and Standard Chartered. Another five banks joined later. They are the Agricultural Bank of China, Bank of Communications, BNP Paribas, ICBC and Shanghai Commercial.
Integrating with other platforms
Last year an agreement was signed to collaborate with the Monetary Authority of Singapore to connect the two local trade platforms to make cross-border trade financing cheaper and fraud-resistant.
Today a Memorandum of Understanding was signed with we.trade to build a PoC which integrates both platforms. Both initiatives use similar technology and have HSBC as a member. HSBC is also involved in the the Voltron Letter of Credit project which launched recently.
Lee commented: “Our next key milestone is to link eTradeConnect with platforms from other regions in order to enable cross-border trade financing. The connection between eTradeConnect and we.trade platform paves the way for the digitalisation of cross-border trades in the Asia and Europe trade corridor, and will serve as a good reference for the future connection of eTradeConnect to other trade finance platforms.”
Roberto Mancone, COO of we.trade, added, “Our co-operation confirms our roadmap and as the first step of developing “network of networks” in blockchain based trade finance solution. This exciting collaboration has the potential to unlock trade finance barriers for between Europe and Asia.”