Blockchain is becoming the rule among top financial institutions that want to reduce costs and transaction times. According to Reuters, HSBC Holdings Plc, said on Monday that it has performed the world’s first trade finance transaction using a single blockchain platform.

HSBC Trades Using Blockchain Technology

Two of the most important financial institutions on earth, HSBC and Dutch bank ING, were able to perform a transaction for Cargill. A shipment of soybeans was exported from Argentina to Malaysia using a single, shared digital application, according to HSBC.

The main benefits of using the system include a reduction of the risk of fraud in letters of credit (LoC), less fees paid to perform the transaction, and faster processing times.

Vivek Ramachandra, global head of innovation and growth at HSBC, told Reuters:

“The reason why letters of credit have persisted is because of two real challenges – the absence of digital infrastructure and the challenge of coordinating multiple parties. This platform helps us overcome the first and I think the technology and everyone focussed on it gives us the impetus to go after the second now with hopefully much better results than we have seen in the past.”

Banks are trying to invest in blockchain technology in a bid to compete against non-traditional payment processing methods like cryptocurrencies, and distributed ledger technology platforms. HSBC and Dutch bank ING, are not the first important financial institutions using that technology.

JP Morgan has its own blockchain platform known as Quorum which is being used by different enterprises and by the bank itself. It is helping financial companies to reduce costs and increase their efficiency.

The transaction performed by HSBC was executed on a platform known as Corda, developed by the Ney York-based blockchain consortium known as R3.