Standard Chartered completes first cross-bank letter of credit using blockchain technology
Standard Chartered Bank announced on Friday (September 11) that it has successfully completed the first cross-bank letter of credit (LC) transaction between Vietnam and Thailand using blockchain technology. The transaction involved Asian Development Bank (ADB), Bank for Investment and Development of Vietnam and Standard Chartered Bank (Thai).
Completed over the Contour network, a blockchain-based platform focusing on digitising trade finance, it involved a US$50,000 shipment of plastics from Thailand’s SCG Plastics to Vietnam’s Opec Plastic Joint Stock Company.
Compared to the paper-intensive and time-consuming processes involved in traditional methods of trade finance, digitising LC issuance and confirmation reduced processing time from up to five days to about seven hours.
It also marks the successful completion of ADB’s first credit guarantee using distributed ledger technology, as well as the first of such LC comprising a sell-down feature to be conducted on Contour.
This transaction paves the way for more banks and corporates to rely on innovative technology that can support the growth of trade.
Carl Wegner, CEO of Contour, said: “With this new functionality to support bank guarantees, we’re able to further our goal of making global trade accessible, digital and secure for all. We will continue to strengthen these connections as Contour enters into production in fourth quarter this year.”
Steven Beck, ADB’s chief of trade and supply chain finance, said: “The coronavirus pandemic has shown that it is essential the trade finance industry quickly digitises operations to make global trade and supply chains more resilient and robust.
“This innovation makes trade more efficient, reduces risk and lowers barriers to entry for small and medium-sized businesses in developing Asia.”
Plakorn Wanglee, president and CEO, Standard Chartered Bank (Thai), said: “We are looking forward to working with all stakeholders to scale up this digital solution for many more of our Thai clients to improve international trade efficiency, particularly intra-Asean soon.”
