A new blockchain-based trade finance platform developed by HSBC, Standard Chartered and 10 other banks, aims to reduce the risk of fraud in letter of credit (L/C) transactions.

The platform also aims to boost efficiency in the multi-trillion-dollar funding of international trade.

Time-saving

HSBC claims the eTrade Connect platform allowed the bank to cut the time it takes to approve trade loan applications from 36 hours to four hours.

Hong Kong Monetary Authority is backing the platform. Other major banks that participated in its development included Agricultural Bank of China and BNP Paribas.

Cost cutting

Blockchain technology in the banking industry is expected to reduce the risk of fraud and cut costs in L/C and other trade finance transactions.

HSBC told the Reuters news agency that the first transaction processed on eTrade Connect involved purchases by furniture and household goods retailer Pricerite.

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