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Treasury & Capital Markets
Hong Kong banks working to bring blockchain trade finance platform from proof-of-concept to production
The Asset 6 Jul 2018
Leading banks in Hong Kong, including ANZ, Bank of China (Hong Kong) Limited, The Bank of East Asia, Limited, DBS Bank (Hong Kong) Limited, Hang Seng Bank Limited, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank (Hong Kong) Limited are launching a trade finance blockchain platform (the Platform) to production use in Hong Kong.
The project was first announced in March 2017 as a proof-of-concept (POC) leveraging blockchain technology to support the currently labor-intensive trade finance business. To ensure the Platform is not a technological experiment like many other POCs, the banks have spent tremendous effort in defining the business model and governance framework using a scalable technological architecture to ensure the readiness of the Platform for production deployment.
The Hong Kong Monetary Authority (HKMA) has been facilitating the banks in taking forward the Platform, the implementation of which is led by the Hong Kong Trade Finance Platform Company Limited (HKTFPCL). Howard Lee, Deputy Chief Executive of the HKMA, said, “This Trade Finance Platform is the first large-scale multi-bank blockchain project in Hong Kong arising from the fruitful results of one of the HKMA's POC works on trade finance in 2017. The goal of the Platform is to help digitize trade documents and automate trade finance processes to reduce risks and increase the financing capability of the banking industry by leveraging the unique feature of blockchain. I feel really excited about the development as it clearly demonstrates the HKMA's commitment in facilitating and driving the adoption of new and advanced technologies in Hong Kong. The next major milestone of this project is to link up with other trade platforms in other jurisdictions to further facilitate cross-border trades.”
Following a comprehensive tendering process, Ping An OneConnect Financial Technology Co., Ltd has been appointed as the technological provider to the Platform and Deloitte as the consulting service provider to support its production deployment.
“ANZ is pleased to be working with the HKMA and fellow banks in this project, given our focus on institutional customers with trade and capital flows in the region. We believe this new platform will help spur the digitization of both physical and financial trade supply chains, making the process more safe and efficient for our clients,” said Ivy Au Yeung, CEO Hong Kong, ANZ.
Linhui Teng, General Manager of Transaction Banking Department, Bank of China (Hong Kong) Limited continued, “The Platform is an essential step forward in the development of electronic trade ecosystem, which cohere with BOCHK's commitment in providing comprehensive e-commerce solution with innovative transaction banking products for our clients. Being one of major commercial banking group in Hong Kong, BOCHK is offering multiple transaction banking products to our clients, we would be capitalizing on various business opportunities and will continue to provide a more convenient business platform for our clients by enriching product lines with technological innovation.”
Adrian Li, Executive Director & Deputy Chief Executive of The Bank of East Asia, Limited, also commented, “We are delighted to be working with the HKMA and our peers to develop this innovative trade finance platform. By simplifying and streamlining documentation, while also enhancing security and reducing risk for banks, the Platform will make trade finance more accessible – particularly for SMEs.”
“With the growing complexity of global financial systems, collaboration with partners through digitization in the trade ecosystem creates greater transparency resulting in better risk management. This allows for inclusion of more related parties on a single platform,” added Sohfern Boey, Head of Global Transaction Services at DBS Bank (Hong Kong) Limited.
The Platform is built on permissioned blockchain technology using Hyperledger Fabric 1.1. It will allow banks and their corporate clients within the ecosystem to submit and record purchase orders, invoices and applications for financing using distributed ledgers, thereby reducing the risks
of fraudulent trade and identity theft, and will therefore increase credit availability and lower financing costs in the long run. By digitizing the currently paper-intensive financing process, it will benefit businesses in Hong Kong, especially small and medium-sized enterprises (SMEs).
Donald Lam, Head of Commercial Banking at Hang Seng Bank, said, “Hang Seng is committed to providing SMEs and commercial customers with simple but comprehensive banking solutions through continuous investment in fintech and our service platforms. We are pleased to be working with the HKMA and other banks in Hong Kong to develop this trade finance blockchain platform, which will further enhance efficiency for trade services and enable us to better serve the changing business needs of our customers in a rapidly evolving market environment.”
Vivek Ramachandran, Global Head of Growth and Innovation, Commercial Banking for HSBC pointed out, “We are delighted to be collaborating with the industry in order to spearhead the continued adoption of blockchain for trade finance in Hong Kong. The announcement is further proof that blockchain has the potential to digitize trade by eliminating inefficient processes and reducing the amount of unstructured paper. We believe Hong Kong is well positioned to benefit as one of the most active and dynamic trade markets globally. As the leading international trade bank, HSBC is committed to driving the transformation of trade, making it simpler, better, faster and more secure.”
Biswajyoti Upadhyay, Regional Head of Trade, Greater China and North Asia, Standard Chartered commented: “Standard Chartered is actively participating in the Platform as a strong commitment to supporting and growing Hong Kong as a major regional trade hub. Digitization of trade is integral to our bank’s strategy, with the aim of better supporting the financing and information needs of our clients and their ecosystem. As a top three trade bank in the world, Standard Chartered is well positioned to help our clients capitalize on this new digital platform to do business in a more efficient and secure manner amidst the more complex environment of global trade.”

The Platform is undergoing user acceptance tests, and is targeting a launch in September this year. The first product supported will be open account financing, but many other trade finance products are in the roadmap. The banks will also bring in more participants from banking and other industries, including logistics, into the ecosystem, as well as integrate the Platform with other blockchain platforms in different jurisdictions, thereby diversifying and maximizing the benefits of the Platform to the Hong Kong economy. 

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