Standard Chartered Bank has announced the successful completion of the first international letter of credit (LC) transaction on the oil industry-focused blockchain platform Voltron.
In an announcement Wednesday, the bank said it had conducted the pilot transaction for PTT Group, PTT International Trading Pte Ltd and IRPC Public Company Limited, which involved shipment of an oil product from Thailand to Singapore.
“Standard Chartered was able to digitise and simplify the end to end exchange of information between all parties in the transaction on the Voltron platform, including the issuance, advising and negotiation of LC and presentation of documents,” the bank said.
According to Samuel Mathew, global head of documentary trade product management at Standard Chartered:
“This pilot transaction marks the first of many that will follow from our participation with Voltron to digitise trade and enhance the client journey. As our clients increasingly look to technology to address the challenges of today’s global trade environment, we are extremely optimistic and excited about the potential opportunities that Voltron brings to the industry with its demonstrated benefits in improved speed and reduced risks of settlement, as well as its flexibility in connecting banks, businesses and other third-party providers in its network.”
Sending the documents electronically over the blockchain platform meant that all participants in the trade were able to view real-time data as the transaction progressed. This, Standard Chartered said, allowed a “significant reduction” in the time needed to complete the trade, which took less than 12 hours.
Oil companies often utilize letters of credit for short-term trade finance, but the process is largely manual and paper-based, taking up to five days for the documents to be delivered.
The use of blockchain also brings the oil industry participants of the Voltron platform greater transparency and cost efficiencies across the supply chain, the company added.
Voltron is an open industry blockchain platform set up to “digitally create, exchange, approve and issue Letters of Credits.”
Jordane Rollin, Standard Chartered’s global head of digital transformation for trade product management added that as Voltron moves towards a commercial launch, “we are continuously getting feedback from our clients via pilots to enhance Voltron with new features. We have also started to ramp up on our contribution to this initiative to expand its offering beyond Letters of Credit and become a new industry standard for digitised traditional trade.”
This week, the bank also completed its first joint supply chain financing transaction with Linklogis for Digital Guangdong – a joint venture between Tencent, China Unicom, China Telecom and China Mobile – aimed to bring digital government services to residents of China’s Guangdong province.
Oil tanker image via Shutterstock