Hong Kong: CargoSmart and eTradeConnect Successfully Test Blockchain Solution to Improve Global Trade
The Hong Kong Monetary Authority and several major banks facilitated the development of a proof-of-concept (PoC) for the creation of a multi-bank blockchain consortium which aims to improve global trade through enhanced collaboration among shippers, banks, terminal operators, and ocean carriers. The announcement was made by CargoSmart, the PoC development company, on November 5.
A TradeLens Competitor
The project developed by CargoSmart aims to connect the supply chain data with trade finance transactions to allow member banks and their customers to accelerate financial processes and document validation by exploiting blockchain technology.
In addition to CargoSmart, the project involved eTradeConnect, a blockchain-powered trade finance program launched by HSBC in partnership with Standard Chartered and ten other banks, and also the multinational network, PwC.
The collaboration among network members (shippers, banks, terminal operators, and ocean carriers) aims to increase the number of participants of the Global Shipping Business Network (GSBN), launched a year ago to provide an alternative to Maersk and IBM’s TradeLens blockchain solution.
The formation of the GSBN is still in development but, according to the announcement, it will be a non-profit organization in charge of managing the personal data of member companies. To encourage participation, the platform will use a strong data governance model which will allow users to maintain total control over the data entered.
A Trusted Network
The project aims to speed up the time required to apply for financing services from shipping companies, a very long procedure that requires significant documentation. The proof of concept developed by CargoSmart allows faster access to information recorded in the eTradeConnect network. Banks will, therefore, be able to take advantage of this database to get a clearer and more precise idea of customers ’backgrounds as the information is provided directly by ocean carriers and terminals. This will make the credit system more flexible also for small and medium enterprises (SMEs).
Taking advantage of the immutability and reliability of data enabled by blockchain amplifies the opportunities of international trade and also promotes economic growth.
Mr. Lionel Louie, the chief commercial officer of CargoSmart commented:
“The proof-of-concept with eTradeConnect has demonstrated the power of trusted networks…“
From the comment, we can understand how this project does not present the exact characteristics of a blockchain. Mr. Louie, in fact, uses “trusted”, an unknown word for the purists of the technology. What happens if the information entered by members of the Network is false?
A real blockchain should be trustless hence the ability to verify the validity of any recorded information.