The Bank of Thailand (BoT) has announced that fourteen domestic banks are teaming up to develop a blockchain-based shared trade finance platform.

According to Nikkei, Thai banking giants, namely, Bangkok Bank, Krung Thai Bank, Siam Commercial Bank, and Kasikornbank, are going to launch electronic letters of guarantee on a shared blockchain platform.

Kasikornbank, in collaboration with IBM, launched the blockchain-based letter of guarantee network last year. The solution will be tested in a regulatory sandbox and expected to go online by September.

"With this infrastructure sharing, banks do not need to invest on their own," BoT Governor Veerathai Santiprabhob told reporters Monday. "Interoperability enhances efficiency, reduces costs in our financial sector and addresses the needs of the consumer and the business sector."

The blockchain-based system will digitize the documents and shorten the lengthy procedure that currently takes days to around 30 minutes. The solution will initially cover letters of guarantee issued for bidders in state-owned enterprise auctions and other domestic trading.

A number of corporates, including the Electricity Generating Authority of Thailand and Siam Cement Group, are set to use the solution. Using the cloud system, they would be able to store their suppliers' letters of guarantee and retrieve updated documents according to their requirement.