Blockchain trade finance initiative Contour has launched a domestic network in Bangladesh that will provide digital letters of credit (LCs) to SMEs in the country.
Owned by eight shareholder banks – Bangkok Bank, BNP Paribas, Citi, CTBC, HSBC, ING, SEB and Standard Chartered – Contour delivers a global network for trade finance over distributed ledger, which allow parties to transact and view information electronically.
Contour’s central offering is the LC, for which the network has managed to reduce processing time by as much as 90% during testing, from an average of 10 days to under 24 hours end-to-end. Since going live in October last year, Contour’s members have been working to scale up the network, with Vinay Mendonca, global head of product, propositions and structuring, trade and receivables finance at HSBC, telling GTR that HSBC is asking its financial institution clients – particularly in large documentary credit issuing markets such as India, Vietnam and Bangladesh – to join the platform and support flows.
With this new launch, Contour is tackling adoption from the ground up. Through a purpose-built network, Contour will offer digital LCs to SMEs in Bangladesh for local and international transactions.
“This is still part of Contour’s network,” Carl Wegner, CEO of Contour, tells GTR. “The key difference is that this is a domestic offering for companies and banks to conduct local transactions in an affordable way, making our platform accessible to corporates of all sizes in Bangladesh. Previously, we have primarily focused on cross-border trade. The network allows these local businesses to tap into Contour’s global network as they grow and expand their own footprint. For local banks, it’s an opportunity to test the system locally first but have access to the growing global network now of 13 banks in 25 countries.”
Bangladeshi corporates and banks have already demonstrated enthusiasm in taking up blockchain technology for LC transactions, and Contour has made significant inroads in the market.
August last year saw Standard Chartered execute the country’s first blockchain LC transaction over Contour, and this was swiftly followed by its first interbank blockchain LC, between Bangladesh’s Prime Bank and HSBC. Meanwhile, earlier this year, Dhaka-headquartered City Bank executed the first-ever cross-border Islamic blockchain LC, in partnership with the International Islamic Trade Finance Corporation (ITFC).
“Bangladesh is among the top LC markets in the world, with LCs being a widely used trade finance instrument for domestic transactions in the country,” says Wegner, adding that Contour aims to become Bangladesh’s main digital trade finance network.
Contour says it now plans to onboard more than 50 corporates supported by Bangladeshi and international banks in the next six months, and adds that it looks forward to “further accelerating banks and corporates with tailored propositions for individual countries in the future”.