Product Overview

HSBC (The Hong Kong and Shanghai Banking Corporation Limited) Holdings Plc. is a part of various trade finance consortia which aimed to digitise the traditional paper-based trade finance process. It had successfully executed multiple trade finance pilots using a blockchain based platform Voltron and was launching its Contour blockchain trade finance platform as a service to its clients. The trade finance market was estimated to be USD 18 trillion on an annual basis and HSBC had a 12% share in the trade finance transactions worldwide. This case revolves around the challenges facing banks/consortia while porting the traditional trade finance process to the blockchain based system. The crux is how the banks form the consortia, implement blockchain and facilitate trading globally given that it is a new technology and will require bringing all the stakeholders involved in the trade finance value chain to the blockchain based platform. HSBC is facing some decision questions on the formation, governance and management of the consortium, on the interoperability between consortia and on how to price its services to its customers.

Learning Objectives

1. To understand the traditional trade finance process. a. What is the role of banks in the trade finance process? b. What are the bottlenecks in the traditional trade finance process? 2. To understand blockchain technology (one of the types of Distributed Ledger Technology) and the role that it will play in transforming the traditional trade finance process. a. Why banks need to form consortia for implementing the blockchain-based trade financing? 3. To understand the challenges in moving the traditional trade finance process to blockchain based system. a. How to bring everyone (corporate clients, freight carriers, insurers, customs, etc.) to the blockchain based trade finance ecosystem? b. Are there any organizational and governance changes required for implementing the use case? If so, what is the nature of these changes?