By
Mayowa Adebajo
March 12th, 2024
The platform is expected to minimize the time and paperwork required in trade finance and supply-chain finance transactions. 21 banks including HSBC and Standard Chartered have already confirmed participation in the project.
Most of the projects of the crypto sphere are created by talented enthusiasts who have to fight for their ideas and prove to the regulators that blockchain can be used to upgrade the existing financial system. The attitude towards blockchain-based projects varies widely from country to country and any demonstration of support inspires the crypto community. The Hong Kong Monetary Authority decided to take a step further and try itself as an initiator of a project that can change the $9 trillion industry.
The Hong Kong’s central bank has announced the testing of its blockchain-based trade finance platform. The project connects 21 banks including the global giants like HSBC and Standard Chartered. The main aim of the blockchain trade finance program is to minimize the amount of time and bureaucracy required in routine operations associated with trading and supply-chain finance transactions. The estimated results of implementing the new technology are incredible: the time needed for some transactions may be shortened from fourteen days to just one.
The company behind the new initiative of the Hong Kong Monetary Authority is Ping An Group’s fintech subsidiary OneConnect. The company that saved its customers over 30% on average in 2017 is working on a blockchain-based solution that can extract a lot of company information at a lower cost. That is a big issue for small companies that have to face the denial in access to banking services caused by the increasing costs of due diligence required to sign up new clients. The platform is also expected to keep all the traditional benefits of blockchain like high level of security and easier fraud detection. The company has already tried using its technologies in mainland China and achieved significant results. However, this year OneConnect decided to get to the new height and currently has over 100 employees outside of China.
The Hong Kong Monetary Authority shows to the whole world that the regulator can benefit from being proactive in using the cutting-edge technologies to modify the financial system. Jessica Tan, Ping An’s deputy chief executive, supports this position:
“Instead of individual banks trying to do this you have the regulator trying to bring the banks together.”
The change in the creator of the initiative may turn out to be crucial for the mass adoption of blockchain in the financial sphere. If the technology gets accepted by banks and other financial institutions, it will force the implementation of blockchain into the business models of companies.
The blockchain-based trade finance platform developed under the supervision of the Hong Kong Monetary Authority is not a unique project, but it has some features that make it stand out from the analogues. It is expected to become not only one of the largest, but one of the earliest government-backed projects of the kind.