HKMA, Deloitte and other banks develop blockchain PoC for trade finance
The Hong Kong Monetary Authority (HKMA), consulting firm Deloitte, and leading trade finance banks in Hong Kong have developed a distributed ledger technology (DLT) proof of concept for Trade Finance.
Industry participants include Bank of China (Hong Kong) Limited, The Bank of East Asia, Limited, Hang Seng Bank Limited, the Hongkong and Shanghai Banking Corporation Limited (HSBC), and Standard Chartered Bank (Hong Kong) Limited.
According to the official announcement, the project leveraged DLT or blockchain technology for the design and development of a PoC for trade finance. It resulted in a platform for banks, buyers and sellers, and logistics companies, and demonstrated the application of DLT in digitizing paper-intensive processes through smart contracts, reducing the risk of fraudulent trade and duplicate financing, and improving the transparency and new product innovation of the industry as a whole, strengthening Hong Kong as a major trade finance hub.
This project has also explored the implications of DLT from the dimension of operations, legal, regulatory, governance and data security.
“We are very pleased to see this industry-led fintech effort on trade finance. The proof of concept result has shown the potential of using Distributed Ledger Technology for trade finance though there are still a number of matters such as legal, regulatory and governance issues which need further consideration. We will continue to work with the banking industry to explore the possibility to materialise the value proposition of this proof of concept work”, Executive Director of the HKMA, Li Shu-pui said.
Deloitte’s blockchain team, with over 800 professionals across 20 countries, works with international organizations looking to roll out blockchain-enabled solutions. The consulting giant has developed over 30 blockchain-related prototypes, covering a multitude of uses such as digital identity, digital banking, cross-border payments, trade finance, and loyalty and rewards solutions, as well as distinct efforts for the investment management and insurance sectors.
“We are delighted to have worked with HKMA and the Working Group members in demonstrating the value of Distributed Ledger Technology (also known as ‘blockchain’) in trade finance. Distributed Ledger Technology has huge potential in financial services to reduce the cost and improve transparency and efficiency. This is an important step in bringing this to reality”, Robert Rooks, FSI Clients and Markets Leader at Deloitte China said.