Today Standard Chartered announced it completed a pilot Letter of Credit (LC) transaction on the Voltron blockchain platform. The shipment was oil cargo going from Thailand to Singapore. The companies involved were Thailand’s national energy company PTT Group, PTT International Trading and PTT subsidiary IRPC. By digitizing the process, the time taken was reduced to under 12 hours from as much as five days for document delivery with paper LCs.
This was Standard Chartered’s first Voltron pilot transaction, though by no means its first for blockchain trade finance. Jordane Rollin who represents Standard Chartered on the Voltron Steering Committee, hinted at Voltron plans beyond Letters of Credit.
“As the consortium prepares for full commercialization of the network, we are continuously getting feedback from our clients via pilots to enhance Voltron with new features,” said Rollin. “We have also started to ramp up on our contribution to this initiative to expand its offering beyond Letters of Credit and become a new industry standard for digitized traditional trade.”
Miss Supasachi Hongsinlark, MD, PTT International Trading commented: “The system will provide more visibility to monitor trade finance flow in real-time, which will improve transparency and credibility for the trading process and thus strengthen the relationship between our partners and stakeholders in the long run.”
Standard Chartered is involved in several blockchain trade finance initiatives. In conjunction with TradeIX, they developed a bank guarantee system for Siemens. TradeIX is the developer behind the Marco Polo network where Standard Chartered is also a participant. Both Voltron and Marco Polo use R3’s Corda blockchain technology.
Last week in China, Standard Chartered took part in a blockchain supply chain finance transaction on the Linklogis “WeQChain” blockchain. In Singapore, it’s a participant in the dltledgers blockchain. And alongside HSBC, the bank is a participant in the Hong Kong eTradeConnect trade finance initiative.
Outside of trade finance, Standard Chartered took part in Thailand’s Central Bank Digital Currency tests (with HSBC and others) and a syndicated loan pilot in partnership with Brazilian bank Itaú Unibanco.
Separately, last week HSBC executed its first Voltron LC in Korea and Vietnam. It was for a shipment from plastics company INEOS Styrolution in Korea to Duy Tan, the Vietnamese buyer. In this case, the exchange of documents was done in less than 24 hours.
Again the benefits were speed and operational efficiencies combined with greater transparency and security. The latter is because documents are digitally signed, which reduces the risk of paper-based fraud. By speeding up the process, money is released faster. And there’s no need for reconciliation because all parties receive simultaneous updates.
HSBC has already run several pilot transactions on Voltron. One of the earlier ones was for giant agribusiness Cargill. At the end of last year, it executed an oil transaction in India with ING, and another in April for cargo between Australia and China. More recently it integrated Voltron with UAE-based Landmark Group‘s blockchain ReChainMe.
SME focused we.trade is another trade finance blockchain where HSBC is a participant.
The bank is also a backer of Tradeshift which is working on its own blockchain trade finance platform. Plus HSBC invested in blockchain technology company Axoni. In January HSBC said it had used blockchain for efficiencies in $250 billion of foreign exchange transactions.