The HSBC international trade blockchain

Why a leading international bank is accelerating blockchain adoption?

HSBC international trade blockchain
Credit: Pixabay

HSBC, one of the largest banks in the world, has changed its stance on blockchain technology from cautious to pioneering. It has come a long way since 2015. Three years ago, HSBC blockchain efforts went no further than casually searching for interns who “understood” Bitcoin. They were lagging miserably behind competitors. But in 2017 they published a blog article on how blockchain could “pull trade into the digital age.”

The international trade blockchain revolution

According to HSBC, trade is one area that stands to benefit from blockchain technology. And in fact, this is where the bank has placed its main focus to date. They believe that businesses of all sizes will be able to trade faster, cheaper, and better worldwide.

Despite living in a digital era, international trade remains a cumbersome process. It is often fraught with delays, bureaucracy, and a large number of paper documents.

One key document that often halts progress is the Letter of Credit. Over US$ 2 trillion of trade depends on its physical exchange. Banks issue Letters of Credit for importers and exporters to act as a means of trust. They reduce the risks associated with trade while providing payment security.

HSBC argues that digitisation of these documents would reduce bureaucracy and margin for error. This would make trade more profitable for all parties involved.

Wiping out bureaucracy with digitisation

While HSBC International trade blockchain efforts are front and centre today, the bank realised an electronic exchange of a Letter of Credit with Reliance Industries in India as far back as November 2016. Without using blockchain technology. HSBC said in a statement at the time, “this paves the way for faster, cost-efficient settlement of cross-border trade.”

By digitising the Letter of Credit, they were able to settle the trade in one day. This is compared to the traditional paper-based documentation that typically takes about 15 days to settle. So, if HSBC could accomplish such a transaction without using blockchain, why the need for one?

One of the blockchain technology benefits is releasing information simultaneously to all parties involved. Making a transaction digitally between one bank and a company is one thing. Allowing for that same exchange to be public and global is another.

However, although the transparent nature of public blockchains may be useful in certain cases, banks and other companies dealing with sensitive information need to be sure that only the right people have access.

This means that they need to use private or permissioned blockchains such as the IBM Hyperledger. These blockchains allow for closed networks where transactions are only visible to the necessary parties.

ING and HSBC blockchain breakthrough

HSBC partnered with ING bank to perform what it called “the world’s first commercially viable trade transaction” with blockchain technology. HSBC issued a Letter of Credit to Dutch lender ING for a shipment of soybeans from Argentina to Malaysia for US-based company Cargill.

Using the Corda platform developed by blockchain startup R3, which works with a consortium of banks. The need for paper reconciliation was removed because all parties are linked on the platform and updates are instantaneous, said HSBC.

According to both ING and HSBC, the exchange took place in just 24 hours.

Investing in International trade innovation

It seems that HSBC has acquired a taste for innovative technologies. In July,, a European blockchain trading platform also completed its first live operation. ( is powered by IBM’s Hyperledger and includes HSBC, Deutsche Bank, Societe Generale, UniCredit, Santander and others.

HSBC also announced this year that they have spent US$ 2.3 billion on new technologies including AI and blockchain to reach “tech-savvy” customers. The bank that seemed very much the turtle in the race has even teamed up with Chinese giant WeChat to communicate with its customers.

Exactly what benefits will be available to the bank’s clients are not completely clear yet, but as we have seen from other major banks and financial services institutions, competition in this sector is fierce. And that can only be a good thing for customers.


This article is an abridged version of an article originally posted at (a P27 Partner) under the headline “HSBC Is Now a Front-Runner in the Blockchain Technology Race”.

CoinCentral’s owners, writers, and/ or guest post authors may or may not have a vested interest in any of the above projects and businesses. None of the content on CoinCentral is investment advice nor is it a replacement for advice from a certified financial planner.


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