HDBank has signed on to a blockchain network from Contour with the aim of bringing trade finance into the digital realm.
The Vietnam-based bank is the latest financial institution to join Contour’s network with a view to streamlining the issuance of letters of credit with the use of a blockchain and smart contracts, local media reported on Tuesday.
Contour is a blockchain trade platform built on R3’s Corda tech and designed to streamline transaction settlement processes. It rebranded from Voltron in late January 2020, naming R3’s Asia chief Carl Wegner as CEO in the run-up to a full commercial launch of its digitized letter-of-credit (LoC) service.
A letter of credit refers to a formal letter from a bank that essentially guarantees a buyer’s payment to a seller within a specific time frame. If for some reason the transaction fails, the letter obligates the bank to cover the full amount of the purchase.
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Historically, letters of credit have been on paper, which is costly in time and manual processing. Putting the process on a blockchain could streamline the process, allowing letters to be issued in real time in a secure and private manner utilizing process automation provided by smart contracts.
“The focus with our network has always been to establish a neutral platform that all different types of banks and corporates can use for trade finance transactions,” Wegner said in a statement.
“That is the ultimate aim of Contour, and it’s something we’re continuing to see as we welcome HDBank into the network,” he added.
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As of Dec. 31, 2019, HDBank had total consolidated assets of $9.89 billion, a year-on-year increase of 21.1%, and equity of $878.8 million, according to Vietnam News.