According to the Financial Times, Hong Kong’s Central Bank will be testing out a blockchain-based trade finance platform. The platform is linked to 21 different banks which include HSBC and Standard Chartered. Although there are a large number of blockchain-based bank-led trade platforms, this is one of the largest examples and one of the earliest government-backed trade finance platforms to go live.

“Instead of individual banks trying to do this you have the regulator trying to bring the banks together,” said Jessica Tan, the deputy chief executive of Ping An Group. OneConnect, the Ping An Group’s finance technology company and firm responsible for designing the Hong Kong blockchain-based trade finance platform, mentioned that it has already deployed the technology in China.

The goal of the Hong Kong Monetary Authority’s blockchain-based trade finance platform is to reduce the sheer time and paperwork required in routine trade finance and supply-chain finance transactions. The platform should help ease the verification process and speed up the credential confirmation process from all parties involved.

The banks that have partnered up with the Hong Kong regulator will together own the platform. While the total number of financial institutions owning the platform has not yet been confirmed, it’s currently expected for 21 banks to join.

Tan mentioned that a key feature of the blockchain-based trade finance platform is its ability to help smaller companies gain greater access to supply-chain finance and trade. Small companies are often denied a variety of banking services due to the significant time required to sign up new clients.

OneConnect however, believes that their blockchain-based system can extract a lot of company information at a lower cost. Therefore, trade finance businesses can sign up smaller businesses. Furthermore, the blockchain-based trade finance platform will also make fraud detection simpler and easier.

Blockchain technology will have a profound impact on trade finance. By reducing the paperwork, documentation, and human labor required to process transactions, it will save the industry a lot of time and money. The emerging technology can also reduce the time required for transactions that take a fortnight down to one day.

Until 2018, OneConnect has been solely focusing on the Chinese market. However, earlier this year, they launched an office in Singapore and the company currently has over 100 employees outside of China. The Financial Times reported that the Hong Kong trade finance platform is considered one of the largest ventures that exist outside of mainland China.

It’s, therefore, no surprise that almost every bank is looking to explore and test blockchain technology. In an Accenture Report, ninety percent of banking executives stated that their bank is looking at the practical uses of blockchain technology. According to a Business Insider Intelligence Report, while most banks are looking at blockchain to reduce costs and processes, they are also looking for new advantages like the potential to create a new business model with the technology.

As seen with Hong Kong’s blockchain-based trade platform, although regulators are cautious with cryptocurrencies, they are very keen when it comes to blockchain technology and often work together with large banks to develop regulatory frameworks.

The post Hong Kong Launches the Largest Government-backed Blockchain-based Trade Platform appeared first on UNHASHED.

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