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Technology Companies and Financial Institutions Employs Blockchain for Business

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Technology Companies and Financial Institutions Employs Blockchain for Business

HSBC and Bank of America Merrill Lynch venture and financial technology firm R3 said separately on Wednesday that they had make ways of applying blockchain technology to simplify trade finance businesses.  Two Financial Institutions joined with Infocomm Development Authority of Singapore to imitate a letter of credit (LOC) transaction. Letters of credit are one of the most broadly used ways to lower risk between importers and exporters, helping guarantee more than $2 trillion worth of transactions, but the process makes a huge paper trail and it could delay transactions.

More than 15 of  R3 consortium member banks have also designed self-executing transaction agreements, known as smart contracts, on R3’s distributed ledger platform to process accounts receivable purchase transactions, known as invoice financing or factoring, and LOC transactions. By putting the transaction on a distributed ledger, the importer and its bank, together with the exporter and its own bank, can see the data in real time.  Discussions are underway with other banks, company customers and shipping firms to further develop the technology, which is in its early stages.

Financial services companies around the world have been focusing on developing blockchain technology, with advocates saying it has the potential to save billions of dollars in costs and speed up transaction times. The technology, which underpins the digital currency bitcoin, creates a shared database in which participants can trace every transaction.

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