HSBC Bangladesh uses blockchain to import 20,000 tons of fuel oil from Singapore

HSBC Bangladesh has completed the country's first blockchain-powered cross-border trade settled using a letter of credit.

The Bangladesh branch of global banking firm HSBC has conducted the country's first blockchain-based letter of credit transaction on the Contour DLT platform.

The transaction was used to settle the importation of 20,000 tonnes of fuel oil from United Group's Singapore subsidiary United Mymensingh Power.

"HSBC Bangaladesh's chief executive, Md Mahbub ur Rahman, described the transaction as showcasing the bank's commitment"to supporting cross-border trade using "Cutting-edge technology platforms."

Global payments service SWIFT estimated that Bangladeshi trades using LCs were worth more than $34 billion during the first half of 2020.

By utilizing blockchain technology, the time taken to process the transaction was reduced from between five and 10 days to less than 24 hours.

"Fuel oil LCs are highly time-sensitive where every second counts and we believe this blockchain technology will help to manage time efficiently and also ensure increased efficiency and better cost management."

Contour is a blockchain platform built using R3's Corda that connects financial institutions and corporate entities in a "Decentralized trade finance network."

Contour is owned by eight financial institutions including HSBC, ING, Citi, Bangkok Bank, BNP Paribas, Standard Chartered, SEB, and CTBC. The platform's development began in mid-2017, then-dubbed "Voltron," before launching in closed beta the following year.

Contour has also been used to settle a 176,000 iron ore trade between Malaysia and China, with the Philippine-based Asian Development Bank also using the platform to execute the first cross-border blockchain LC transaction between Vietnam and Thailand.