Bangkok Bank (BBL) is set to roll out a blockchain-based letter of credit (L/C) service next month and aims for the innovative financial service to increase the bank’s trade finance business.
The bank will use R3’s Corda-powered Voltron platform to digitise the L/C process, said executive director Charamporn Jotikasthira.
BBL is the only Thai bank among the eight founding members of Voltron, which include BNP Paribas, HSBC, ING, and Standard Chartered Bank.
The R3 consortium is setting up a company that will be held equally by the eight banks, and the blockchain-based L/C service is expected to be launched in December, he said.
With collaboration from the eight international banks, the blockchain-based platform can cover export and import business exposure worldwide.
It will support e-commerce business globally and provide greater opportunities for Thai businesses, said Mr Charamporn.
BBL, Thailand’s third largest lender by assets and No.1 for international banking business, is executing pilot blockchain L/C transactions for a company in Indonesia.
He said BBL decided to run pilot transactions for blockchain L/C in Indonesia because of the readiness of all related parties including the bank’s Indonesia branch, the partner, and customers.
The bank has educated and trained staff in its overseas networks to prepare for the blockchain L/C offering.
With the blockchain technology, importers and exporters can shorten the L/C transaction process to one day compared with the average 10 days for the traditional process, said Mr Charamporn.
The digital technology should increase business efficiency and cut operating costs for operators significantly, he said.
“The bank can shorten the process of L/C verification with greater security and transparency. This provides more potential to grow trade finance business from next year,” said Mr Charamporn.
He said other Thai banks can join the new company and some local banks have expressed an interest in doing so. More partners would help strengthen the ecosystem of the business segment.
Thailand’s international trade volume, of which around a quarter is intra-Asean trade, amounts to several tens of billions of baht per year. The service would help simplify trading operations and enable them to easier access trade finance services.
Even though Thai exports face high risks from external factors, especially the US-China trade spat, it is a good time to develop the country’s infrastructure base in preparation for a trade recovery, said Mr Charamporn.
BBL shares closed yesterday on the SET at 176.50 baht, up 2.50 baht, in trade worth 1.18 billion baht.
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