Garment exporter Viyellatex has successfully conducted a transaction using blockchain technology with the help of Standard Chartered
Standard Chartered has successfully carried out Bangladesh’s first blockchain transaction using a letter of credits on the Contour blockchain. The bank acted as the advisory and also the issuing bank for the letter of credit for textile export company, Viyellatex.
Blockchain payments are paperless, save time and are very efficient.
Traditional transactions can result in long waiting times, with servicing and processing fees charged by intermediaries. Often, by the time the money is received, it is not guaranteed that the recipient will get the full amount due to varying exchange rates.
When the same transactions are automated via blockchain, there are no fees charged by intermediaries, and the time to process the transaction is much lower.
By eliminating unnecessary fees, Viyellatex is expecting higher efficiencies and cost reductions.
The CEO and Chairman of Viyellatex, KM Rezaul Hasanat, commented:
“Blockchain technology will certainly increase trading efficiency and reduce the turnaround time of the LC process.”
The use of the Contour blockchain in the transaction was likely intentional, as Standard Chartered was one of its founding members. Many Asian banks are working with blockchain-based platforms for trade.
The bank was responsible for piloting the first cross-border blockchain letter of credit in the oil industry, and was also the first to peg the system with the Chinese Yuan.
Becoming the norm
Many businesses and countries are starting to recognise how much blockchain can help facilitate transactions — as the technology is a great fit for any cross-border transaction.
This poses a threat to financial institutions that do not adopt the technology, as their business model relies on acting as an intermediary for global clearing operations.
Many banks have started to adopt blockchain payment solutions. Banco Santander recently introduced a payment app, One Pay FX, in collaborations with Ripple.
The Chief Technology Officer of One Pay FX, Ed Metzger, shared that:
“They have so much confidence in the low cost, same day process, it’s no longer a big deal to send money abroad”.
The app allows people to transparently send money through blockchain to result in more transparency and less costs than traditional methods. The existing system for sending money internationally can take three to five days, with much higher costs attached to using it.