Banks develop a blockchain prototype solution for trade finance

(Brave New Coin, Southbank AU, 15 August 2016) Bank of America Merrill Lynch (BofAML), HSBC, and the Infocomm Development Authority of Singapore (iDA) recently announced that they have jointly developed “a prototype solution built on Blockchain technology that could change the way businesses around the world trade with each other.” Trade finance involves a range of activities; lending, issuing letters of credit (LCs), factoring, export credit issuance, and insurance. The processes are typically time and labor intensive, involving many parties while multiple documents must be checked to reduce risk and provide assurance to sellers, buyers, and their banks. An LC or Documentary Credit represents a guarantee by a bank that a seller will receive payment from a buyer once certain conditions are met. Using blockchains, all parties involved in an LC transaction can view all actions in real-time, such as when the seller has shipped the buyer's goods. “Each action in the workflow is captured in a permissioned distributed ledger, giving transparency to authorised participants whilst encrypting confidential data,” states the project press release.