Prominent financial institutions keep taking advantage of the blockchain industry in several ways. The latest case involves the Standard Chartered bank, which announced this week that it successfully completed its first international letter of credit (LC) transaction on Voltron.
Voltron is a blockchain ecosystem that shifts its focus on the ever-important oil sector. According to the Standard Chartered announcement, an oil-related shipment from Thailand to Singapore was conducted as a pilot transaction on the platform, involving the PTT Group, PTT International Trading Pte Ltd and IRPC Public Company Limited.
Digitizing and Simplifying the Exchange of Information
The bank stated that it was “able to digitize 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 development makes for a very positive step for the oil industry. Another Standard Chartered spokesperson, in this case the global Head of documentary trade product management, Samuel Mathew, “this pilot transaction marks the first of many that will follow from our participation with Voltron to digitise trade and enhance the client journey.”
He continued: “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.”
Watching Real-Time Data As the Transaction Occurs
Thanks to the addition of the blockchain technology to the equation, all parties were able to see real-time data as the transaction went through, including all the paperwork and documents that were sent via the digital platform.
That situation, according to the bank in question, helped to significantly reduce the amount of time that the network needed to complete the trading operation. It was, to be precise, less than 12 hours.
Letters of credits are resources that firms working in the oil industry often use to obtain trade finance in the short term. However, the process can take a lot of time if done the traditional way, because it implies lots of paper exchanging hands. It usually takes several days for the documents to be delivered, up to five.
Increasing Transparency and Cost Efficiency
But that is no longer the case thanks to the blockchain technology and, specifically, Voltron. It also helps keeping things more transparent and promotes cost efficiency in the whole supply chain, according to the enterprise.
Voltron is known around the industry for being a blockchain platform that companies use to “digitally create, exchange, approve and issue Letters of Credits.”
Standard Chartered’s global Head of digital transformation for trade product management, Jordane Rollin, explained that whilst Voltron keeps marching towards its launch at a commercial scale, “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.”
By Andres Chavez