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HSBC finances transaction on blockchain platform ‘we.trade’ for the first time

Source: HSBC

Wed, 28 Aug 2019, 05:29 am UTC

Banking giant HSBC has reportedly become the first bank to finance a transaction on European blockchain trade platform, we.trade, Global Trade Review (GTR) reported.

Built on the IBM Blockchain Platform using Hyperledger Fabric, the we.trade platform aims to simplify the financial processes underlying international trade for SMEs. The project was launched in 2017 and is backed by a consortium of leading banks including Deutsche Bank, HSBC, KBC, Natixis, Rabobank and Société Générale, Nordea, Santander, and UniCredit, among others.

The latest transaction involved HSBC’s client Beeswift, a Midlands-based protective equipment manufacturer, selling goods to a Netherlands-based company banked by Rabobank.

Using the we.trade platform, the entities were not only able to create and accept a purchase order online, but also obtain a bank payment undertaking (BPU) from Rabobank, with Beeswift receiving financing from HSBC against the BPU.

The BPU constitutes an irrevocable and absolute undertaking by a bank to make a payment directly to the seller, following the fulfillment of the settlement conditions defined in the smart contract.

The we.trade platform helped digitize the entire process, thereby allowing Beeswift to complete the trade finance transaction within 24 hours. For context, the traditional letter of credit transactions usually take around 10-12 days.

HSBC said that while a number of transactions have been facilitated on the we.trade platform, this marks the first time that a transaction involved financing against the BPU.

Ian Tandy, head of global trade and receivables finance for HSBC UK, told GTR:

“We’ve done a number of transactions. It’s beta stage at the moment; it’s a pilot. This is the first transaction where we have had two buyers use the system end-to-end, including the ability to write the invoice, agree to trade terms, provide the BPU, and additionally receive funding off the back of that BPU.”

HSBC is also actively involved in another blockchain-based trade finance initiative, called Voltron. Using the platform, the bank executed a blockchain-enabled live trade Letter-of-Credit (LC) transaction between South Korea and Vietnam in May.

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