Singapore – Standard Chartered announced the successful completion of the first cross-bank Letter of Credit (LC) transaction between Vietnam and Thailand conducted over blockchain, in partnership with Asian Development Bank (ADB), Bank for Investment and Development of Vietnam and Standard Chartered Bank (Thai).
The transaction was completed over the Contour network, a blockchain-based open industry platform focused on digitising trade finance, and involved a US$50,000 shipment of plastics from Thailand’s SCG Plastics Co., Ltd. to Vietnam’s Opec Plastics Joint Stock Company.
Compared to the paper-intensive and time-consuming processes involved in the traditional methods of trade finance, by digitising the end to end exchange of information and streamlining the process of LC issuance and confirmation, all trade participants achieved a significant reduction in processing time from up to five days to within seven hours.
It also marks the successful completion of ADB’s first credit guarantee using distributed ledger technology, as well as the first of such LC comprising a sell-down feature to be conducted on Contour.
The transaction further paves the way for more banks and corporates to collaborate on innovative technology that can support the growth of trade, having demonstrated the ability to complete the trade sell-down process with greater speed and efficiency.
Sam Mathew, Global Head of Documentary Trade, Standard Chartered, said:
“As one of the founding members of Contour, we are delighted to have co-created this new credit guarantee module with ADB and Contour.
The success completion of this pilot marks another remarkable milestone in our journey towards transforming documentary trade with risk participation weaved into the blockchain platform. It also highlights the need for industry players to come together and develop innovative and scalable solutions.
We believe this added capability will help to drive scale and adoption in the industry, as well as increase operational resilience for both our clients and partners.”
Carl Wegner, CEO of Contour, said:
“With this new functionality to support development bank guarantees, we’re able to further our goal of making global trade accessible, digital and secure for all.
Through our continued work with Standard Chartered Bank as well as welcoming ADB to our network, Contour’s work with banks and corporates is helping to define a new global standard for trade – simplifying and removing barriers in the trade ecosystem, and allowing everyone to collaborate seamlessly on one platform.
We will continue to strengthen these connections for trade as Contour enters into production in fourth quarter this year.”
ADB’s Head of Trade & Supply Chain Finance Steven Beck, said:
“The coronavirus pandemic has shown that it is essential the trade finance industry quickly digitises operations to make global trade and supply chains more resilient and robust.
This innovation makes trade more efficient, reduces risk and lowers barriers to entry for small and medium-sized businesses in developing Asia.”
Thammasak Sethaudom, Vice President – Finance and Investment & CFO, SCG, said:
“SCG places importance on integrating digital technology into its business operations to enhance the organisation and business partners’ efficiency and competitiveness.
Hence, the partnership with Standard Chartered to perform transactions via Contour will improve LC efficiency and enable a fast and accurate authentication process while remaining secure.
Plus, it can help SCG efficiently maximise other resources such as human, financial capital, and time.”
This is history making step! Well done.