The Trade Finance Advisory Group at Global Shipping Business Network (GSBN) has developed the first proofs-of-concepts for trade finance products.
The group aims to build a blockchain-enabled operating system to digitally enhance trade finance and ultimately improve the end-to-end operational efficiency as well as the transparency of data in the supply chain.
GSBN’s Trade Finance Advisory Group is comprised of Bank of China (Hong Kong) Limited (BOCHK), DBS Bank, and The Hongkong and Shanghai Banking Corporation Limited (HSBC).
GSBN has reached proofs-of-concepts for two trade finance products – Open Account and Letter of Credit – following six months of collaboration with its partners.
With Open Account, applicants can authorise their bank to directly inquire Bill of Lading data via GSBN’s blockchain-enabled platform for their proof of shipment.
Similarly, with Letter of Credit, applicants can authorise their bank to use an electronic Bill of Lading (eBL) application built on GSBN’s platform to acquire relevant eBL information and instruct a title transfer.
GSBN has reported that these digitally enabled solutions enable accessible, fast, and equitable access to trade finance for small to medium sized enterprises (SMEs). Meanwhile for financial institutions, this translates into better risk management, cost efficiencies, and improved customer experience.
“The global trade finance gap is set to reach $2.5 trillion unless we harness technology to cut through the complexities and siloes between supply chains,” said Bertrand Chen, CEO at GSBN.
“Reaching proofs-of-concepts of trade finance solutions is a testament to the commitment and momentum of this group, that we are accelerating the development of scalable, real-world solutions to bridge this gap.”
Ajay Sharma, Regional Head of Global Trade and Receivables Finance for Asia Pacific at HSBC, added: “The need to further digitise trade has been made abundantly clear by the pandemic.”
“By stripping out inefficiencies and removing friction, we can increase the volume and velocity of trade, decrease time to cash, and deliver other benefits that will improve the overall customer experience.”
Following the proofs-of-concepts, the Trade Finance Advisory Group will explore opportunities to conduct live customer pilots to validate the new protocols.