Banking giants Bank of America and HSBC have teamed up with the Singapore government’s IT and telecom agency on a project that applies blockchain to trade finance.
Announced today, Bank of America, HSBC and the Infocomm Development Authority of Singapore (IDA) revealed they have built a blockchain application based on the Hyperledger protocol that aims to replicate the letter of credit (LC) transaction process between banks, exporters and importers.
The trial finds the financial firms seeking to explore how a distributed ledger could establish trust between parties that today need to rely on banks to issue and recognize paper documents as a means of facilitating trade.
According to International Business Times, the proof-of-concept involves a seven-step process that showcases how a distributed-ledger system can be used for data authentication.
In statements, HSBC lauded the experiment as an “exciting” step that validates how the technology could come to be used more widely.
“Many people are talking about the theory of blockchain, but for the first time we can start to see how this technology might be used to solve the real world challenges our customers face,” Vive Ramachandran, global head of product for HSBC’s trade finance business, said.
The trial is one of a number to be launched with a focus on supply chain and trade finance in recent months. Notably, both Bank of America and IDA have previously been reported to have been working on similar projects.