Plan is to establish a secure way to manage open account trade transactions for both domestic and international commerce.
HSBC is partnering with the likes of Deutsche Bank and Société Générale on a new Blockchain-based trade finance platform, and it is possible that the system could go live this year.
Named The Digital Trade Chain (DTC), the function of the software is to establish a secure way to manage open account trade transactions for both domestic and international commerce. DTC is also designed to allow the progression of transactions to be tracked from initiation to settlement. This process will be carried out and managed by a distributed ledger.
The process will lead to a reduction in administrative tasks, such as paper work, while also speeding up the order-to-settle process. In addition to improved time efficiency, DTC is intended to provide tough Blockchain security. All parties will be able to view the same version of the ledger, with complex cryptography and group authentication standing guard.
Andrew Betts, head of global trade and receivable finance for HSBC’s Europe division, said the 2017 release target was “an ambitious but realistic one”.
In statements to CoinDesk, the banks outlined that the target is to reduce transacting costs for European businesses, particularly those of modest sizes. The partners have organised a backstop for the project, involving an undisclosed figure to pay for developers and to cover other costs.
The banks involved are KBC, Deutsche Bank, HSBC, Natixis, Rabobank, Société Générale and UniCredit, and a memorandum has been signed which sets the groundwork for future development. Open account trade transactions involve shipping products before the payment is due, meaning that trust among the parties involved is essential.