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HSBC, Standard Chartered and 10 additional banks have developed a new blockchain based platform called eTrade Connect that vastly reduces the time it takes to approve trade loans, according to a new report. HSBC and co. collaborated with other banks on the project including the Hong Kong Monetary Authority, Agricultural Bank of China and BNP Paribas.
This is a major step towards transforming the financial trading industry that has changed little in the last few decades, still remaining heavily paper-based. This unchanging nature has meant that trade loan applications can take over 1.5 days, which is increasingly becoming not fit for purpose in a fast-paced modern world. With this new blockchain-based platform these trade loan applications can take as little as four hours, vastly speeding up the process. One of the main reasons for this is that the blockchain platform cuts down the number of steps required in the traditional process, allowing trade loan applications to move quickly through the system, better aiding the needs of customers. This move is revolutionary when you consider that in 2017 trade finance transactions account for over $9 trillion.
HSBC has said they plan to collaborate with a European based digital trading platform called We.Trade which uses similar technology with the aim of developing the platform and increasing efficiency. The main participants of We.trade are Deutsche Bank, UBS and HSBC.
Pricerite, a furniture and household goods retailer has already used the eTrade Connect platform for purchasing supplies for its business, proving its a move welcomed by the industry. It is also believed that blockchain platforms will help reduce fraud because they provide a more rigid security structure than traditional methods.
The move towards blockchain platforms in the finance industry is one some banks are grabbing by the horns and using to their advantage. Some major banks like HSBC and JP Morgan have recognized the importance of this technology in streamlining their financial processes and have made proactive moves to not be left behind in the increasingly fast-moving FinTech industry.
There are still the more traditionally minded banks who mistrust blockchain technology and have little intention of making the jump to blockchain platform development, but those banks run the risk of being left behind. As blockchain platforms become more widespread within the major banks and users become accustomed to the new platforms and realize how much simpler they are, traditional banks will find themselves chosen less.
We are likely to see more banks making this move in the near future as blockchain technologies continue to prove themselves to be trustworthy and effective for modern financial practices.