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The Saudi British Bank (SABB) and HSBC have announced that they have used blockchain technology for financing an international trade transaction between Saudi Arabia and Bahrain.
According to a press release, the transaction involved the shipment of homogenized aluminium billets from Aluminium Bahrain B.S.C. (Alba) to Saudi Arabia’s Altaiseer Aluminium Corporation (TALCO).TALCO issued a Letter of Credit (LC) on a blockchain-based platform using R3’s Corda system.
SABB said that this marks the first time that blockchain technology was used in Saudi Arabia and Bahrain to finance international trade. The move is expected to bring “new levels of efficiency, security and transparency for corporate’s looking to access new markets.”
“There’s been a lot of excitement about the commercial benefits of blockchain, so I’m proud we’re first to use it to improve how Saudi corporates trade internationally. Blockchain can improve many aspects of international trade, so it’s great to be in a position to pioneer these changes for the good of our customers and the economy,” Majed Najm, Deputy Managing Director, Corporate and Institutional Banking, SABB, said.
The transaction proved the commercial and operational viability of blockchain as an alternative to the existing process of exchanging of paper-based documentation. The blockchain LC flow replicated the traditional process – right from agreeing to LC terms and issuance to discrepancy resolution and bill settlement instructions – with all participants using a single blockchain platform.
R3’s Corda platform enables to track and trace information as it moves between parties. By keeping all stakeholders in sync, it reduces the need for reconciliation and speeding up transactions, whilst providing visibility on progress for all. This, in turn, boosts confidence for all parties involved.
In September 2018, SABB became the first bank in Saudi Arabia to join the global blockchain consortium led by enterprise software firm R3. Earlier this year, it launched a Ripple-powered instant cross-border transfer service.
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