The Hong Kong Monetary Authority is preparing to launch a blockchain-based trade finance platform, according to a report from Financial Times. The project is a joint effort between the HKMA and Chinese firm PingAn Group’s financial technology subsidiary OneConnect, which designed the platform. 21 banks are expected to be involved, including HSBC.
Reports suggest that the collaborating banks will own the platform, which is intended as an upgrade for the $9 trillion global trade finance industry. The project’s reliance on blockchain technology is expected to reduce paperwork, save time, and simplify verification and confirmation processes.
Ping An deputy chief executive Jessica Tan has also suggested that the cost savings will enable smaller firms to enjoy access to chain-supply and trade finance – something that due diligence costs have long prevented.
China Money Network reported that blockchain technology could provide other important benefits as well:
“Blockchain makes the platform nearly un-hackable, as it uses a decentralised ledger technology and employs thousands of individual computing nodes to verify transactions.
Fraud will also be easier to detect on the new trade finance platform. Companies often request more financing from banks than needed to fund the trade. Once trades are recorded in the blockchain, all parties will be able to check the level of financing requested and reduce the ability to acquire excess funds.”
The new platform will reportedly launch in August 2018.