Hong Kong's Central Bank to Run Blockchain-Based Trade Finance Pilot ProgramJul 16, 2018, 5:06PM
A Hong Kong-based alliance of banks aims to ease trade financing for small companies using blockchain in a project backed by the government.
As the Financial Times reports, Ping An Group’s finance technology company OneConnect will be responsible for the platform's deployment and design. This will be one of the first such projects to launch with the blessing of a federal government. The new platform will operate under the umbrella of the Hong Kong Monetary Authority and will be co-owned by partners from across the banking sector.
Jessica Tan, Deputy Chief Executive of Ping An Group described the collaboration to the Financial Times,
Instead of individual banks trying to do this you have the regulator trying to bring the banks together.
Streamlining Financing Processes for Small Businesses
The platform will provide small companies with easier access to trade and supply chain financing. Many smaller companies are currently denied access to certain banking services, as proper review processes for registering new clients can be a cumbersome and timely process that the banks prefer to avoid. Distributed ledger technology simplifies the customer evaluation process and mitigates the paperwork and time that are currently required. As a result, customer data processing costs will decrease. Fraud detection will also be one of the major benefits blockchain will bring to the review process.
Hong Kong's banking system has shown leadership in blockchain adoption. HSBC was the pioneer that completed the first-ever blockchain trade finance transaction. Around the world, there are now a number of banks that have experimented with different use cases for blockchain. However, that this project is being undertaken with the government's involvement is a big step toward mainstream adoption.
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