HSBC is nearly ready to write live trade finance business based on blockchain technology with clients.

The bank has been at the forefront of piloting letter of credit (L/C) blockchain or distributed ledger technology proofs of concept and pilots.

Blockchain history

Nearly a year ago HSBC, Bank of China, Bank of East Asia, Hang Seng Bank and Standard Chartered co-introduced a proof of concept blockchain platform for use with trade finance operations which included issuing L/Cs, lending, factoring, export credit and insurance.

The bank was also involved in a pilot with Bank of America Merrill Lynch and the Infocomm Development Authority of Singapore on a proof of concept to mirror L/Cs using blockchain technology.

Nearly ready

Senior innovation manager at HSBC, Joshua Kroeker, has now told media that the bank is on the verge of conducting live blockchain transactions because it has now solved a sufficient number of the issues associated with the technology to go live with clients.

There remain many other issues to solve however before blockchain based L/Cs can be commercialised, including building a network of parties, including banks, regulators, customs and logistic supply chain partners.

But Kroeker is sufficiently confident that HSBC has now built in sufficient security and scalability to take blockchain based trade finance to the next level.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.