HSBC has carried out a proof of concept with Hong Kong-based blockchain consortium Global Shipping Business Network (GSBN), using a data ‘clean room’ for the exchange of supply chain data to support trade finance applications.
Before agreeing to provide trade finance to a client, banks must first understand their business by looking into their working capital cycle, trade routes and counterparties. Currently, this information can only be obtained by asking customers to produce a checklist of paper documents from various parties such as bill of ladings, invoices and contracts.
A large contributory factor to the ever-increasing trade finance gap is the inability of borrowers to provide this information, as well as the high cost to serve as a result of cumbersome, paper-based processes.
As a member of GSBN’s trade finance advisory group, HSBC is working with the blockchain consortium to solve for this issue by leveraging trusted digital data from the supply chain to gain a better understanding of clients’ shipping activities.
The trial, which GSBN says is one of many, saw GSBN collect synthetic shipping records from its carrier members. These were then aggregated and processed in a secure, privacy-safe environment – or data clean room – provided by Switzerland-based tech firm Decentriq, which is a founding member of the Confidential Computing Consortium. HSBC was then able to access data such as number of shipments, distribution of cargo nature and average cargo quantity, to inform financing decisions.
“Alternative data opens a new path to simplifying trade finance as it allows banks to gain more timely, accurate and relevant insights of clients’ activities,” says Aditya Gahlaut, HSBC’s Asia Pacific co-head of global trade and receivables finance. “We will continue to leverage the latest technology and collaborate with different stakeholders in the industry to make trade finance faster, easier and more accessible for importers and exporters.”
GSBN says that the combined use of blockchain and confidential computing technologies ensures ease of insight sharing while maintaining a high level of privacy, security and auditability throughout the data lifecycle. “Not only does this strip away sensitive or unnecessary information, displaying only the necessary statistics and insights to the bank for its assessment, it also increases the representativeness of the statistics enabled by the aggregation of data across multiple parties,” the company adds.