HSBC and the Dubai-based multinational conglomerate Landmark Group announced the completion of a “first-of-its-kind” transaction that connected two independently-built blockchain platforms.
The bank said that the transaction proved the interoperability of each platform and showed how collaborative technologies can further accelerate international trade in the future. It also marks a major step forward in the Middle East’s retail industry adopting blockchain.
The transaction involved a shipment from Bee Dee Industries in Hong Kong to Babyshop, Landmark Group’s family retail brand in the United Arab Emirates (UAE).
A letter of credit (LC) was issued by HSBC using its Voltron platform and Landmark Group’s initiated ReChainME platform, which “enabled seamless connectivity with its logistics partners at both ends of a key trading corridor.”
This enabled all the key participants along the logistical supply chain to view documents and track progress of the shipment in real-time, thereby reducing the overall time to complete the transaction by up to 12 days, a 40% reduction. HSBC said that it also helped reduce the need for paper, as retail supply chains typically involve large numbers of paper documents that are screened and updated at multiple touch-points.
Speed and efficiency
Commenting on the success of the transaction, Rajesh Garg, group chief financial officer (CFO), Landmark Group, said: “We saw the promise of blockchain technology and embarked on the journey. This is a huge milestone for us at Landmark Group.
“Embracing new and emerging technologies like blockchain in our physical and financial supply chain not only aids in improving speed to market efficiency but also reflects our commitment to driving transformation in the retail sector and ultimately creating value for our customers. As a leading retail organisation in the Middle East, we’re proud to have taken the lead in this area.”
Sunil Veetil, regional head of trade at HSBC Middle East, North Africa and Turkey, added: “We have seen several advancements in digitising trade, each with their own specialist network for secure communication, resulting in disparate ‘digital islands’.
“The challenge lies in connecting these digital islands to create a cohesive network, and this is where blockchain comes in. Being able to connect two complementary blockchain platforms is a significant milestone in the development of this technology. It also speaks to the dynamism and interoperability of Voltron.
“In a world where businesses are increasingly positioning their supply chains across several markets, blockchain platforms will undoubtedly give them a competitive advantage by increasing the velocity of trade without compromising on privacy and security.”
The two platforms
Voltron is a distributed ledger technology (DLT) trade finance platform which digitises trade finance documents, including the LC, process from application through to document presentation. It was launched last October by the R3 consortium and eight founding member banks, including HSBC.
HSBC has previously facilitated four major LC transactions with this technology across its global network, but this is the first time Voltron has been connected to a complementary blockchain platform, and the first time Voltron has been used to issue a LC between the UAE and Hong Kong.
ReChainME is Landmark’s own permissioned blockchain platform. It ensures seamless connection amongst key participants involved in the transaction, resulting in greater transparency and accountability.
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