SABB and HSBC have for the first time used blockchain technology in Saudi Arabia and Bahrain to finance international trade. The move puts Saudi Arabia and Bahrain at the forefront of global trade, introducing new levels of efficiency, security and transparency for corporate’s looking to access new markets. The transaction involved the shipment of homogenized aluminium billets from Aluminium Bahrain B.S.C. (“Alba”) to Saudi Arabia’s Altaiseer Aluminium Corporation (“TALCO”). A Letter of Credit (“LC”) was issued by TALCO on a blockchain based platform using R3’s Corda system. Majed Najm, Deputy Managing Director, Corporate and Institutional Banking, The Saudi British Bank, said: “There’s been a lot of excitement about the commercial benefits of blockchain, so I’m proud we’re first to use it to improve how Saudi corporates trade internationally. Blockchain can improve many aspects of international trade, so it’s great to be in a position to pioneer these changes for the good of our customers and the economy.” Melika Betley – CEO, HSBC Bahrain, said: “As the world’s leading bank for trade finance, HSBC is actively supporting the adoption of technologies such as blockchain to make global trade faster, safer and simpler. With intraregional trade continuing to grow, we see tremendous potential for blockchain in the GCC. I’m delighted that this transaction has involved Bahrain and plays to its strengths as a rapidly evolving fintech ecosystem.” This transaction further evidences the commercial and operational viability of blockchain as an alternative to conventional exchanges of paper-based documentation. The blockchain LC flow mirrors the traditional process (agreeing letter of credit terms, application, issuance, advising, amendment request and its approval, document presentation, discrepancy resolution, and bill settlement instructions), with all participants using a single blockchain platform. R3’s Corda uses blockchain to track, and trace information as it moves between parties. The Corda technology keeps all stakeholders in sync, reducing the need for reconciliation and speeding up transactions, whilst providing visibility on progress for all. This visibility means greater confidence for all parties involved, including banks, making trade finance more straight forward. Suliman S. Al Oufi, General Manager, TALCO, said: “We’re delighted to be the first to trial the use of blockchain in this way. We’ve always been innovative in terms of technology related to our product so it is a natural progression to explore innovation that helps us to trade more efficiently with our key overseas partners. We’re delighted banks like SABB are exploring new ways to take the hassle out of international trade for Saudi companies.” Ali Al-Baqali, Acting CEO – Aluminium Bahrain B.S.C. (Alba), said: “Bahrain is on the go to establish itself as a hub for digital solutions specifically in FinTech arena within the region. At Alba, we don’t see ourselves just as an aluminium supplier but we want to be also recognized for our progression in selling and trading more efficiently through digital platforms with our key partners such as TALCO.” A blockchain is a system in which an immutable record of transactions is maintained across several computers that are linked in a peer-to-peer network. Through decentralised, secure networks, blockchain technology can be the conduit that connects trade partners globally to share data in a scalable way that makes the trade process faster, safer and simpler. It is a one-step process that helps to remove pain points in trade by acting as a catalyst – making trade more attractive and accessible than ever before.
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