Landmark and HSBC complete cross border blockchain transaction using Voltron

Landmark Group and HSBC have completed a first-of-its-kind transaction that connected two independently-built blockchain platforms, proving their interoperability and showing how collaborative technologies can further accelerate international trade in the future. It also marks a major step forward in the Middle East’s retail industry adopting blockchain.

The transaction involved a shipment from Bee Dee Industries in Hong Kong to Babyshop, Landmark Group’s family retail brand in the UAE. A Letter of Credit was issued by HSBC using the Voltron platform and Landmark Group’s initiated ReChainME platform, enabled seamless connectivity with its logistics partners at both ends of a key trading corridor.

This meant that all the key participants along the logistical supply chain could view documents and track progress of the shipment in real-time, thereby reducing the overall time to complete the transaction by up to 12 days, a 40% reduction. It also helped reduce the need for paper, as retail supply chains typically involve large numbers of paper documents that are screened and updated at multiple touch-points.

Voltron is a distributed ledger trade finance platform which digitises the Letter of Credit, LC process from application through to document presentation. HSBC has previously facilitated four major LC transactions with this technology across its global network, but this is the first time Voltron has been connected to a complementary blockchain platform, and the first time Voltron has been used to issue a LC between the UAE and Hong Kong.

ReChainME is a permissioned blockchain platform initiated by Landmark Group. It ensures seamless connection amongst key participants involved in the transaction, resulting in greater transparency and accountability.

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.

Voltron is a blockchain-based open industry platform to create, exchange, approve, and issue Letters of Credit on Corda, R3’s blockchain platform. It is initiated by eight founding member banks, including Bangkok Bank, BNP Paribas, CTBC, HSBC, ING, Natwest, SEB and Standard Chartered, in partnership with Bain, CryptoBLK and R3.

Voltron will improve the trade finance process by simplifying letters of credit, delivering shorter settlement times, instant discrepancy resolution and simplified sanctions screening. Voltron is inviting banks, technology partners, and corporates to join the network.

Rajesh Garg, Group Chief Financial Officer, Landmark Group, said: “We saw the promise of blockchain technology and embarked on the journey. This is a huge milestone for us at Landmark Group. Embracing new and emerging technologies like blockchain in our physical and financial supply chain not only aids in improving speed to market efficiency but also reflects our commitment to driving transformation in the retail sector and ultimately creating value for our customers. As a leading retail organisation in the Middle East, we are proud to have taken the lead in this area.”

Sunil Veetil, Regional Head of Trade at HSBC Middle East, North Africa and Turkey, said: “We have seen several advancements in digitising trade, each with their own specialist network for secure communication, resulting in disparate digital islands. The challenge lies in connecting these digital islands to create a cohesive network, and this is where blockchain comes in. Being able to connect two complementary blockchain platforms is a significant milestone in the development of this technology. It also speaks to the dynamism and interoperability of Voltron.”

“In a world where businesses are increasingly positioning their supply chains across several markets, blockchain platforms will undoubtedly give them a competitive advantage by increasing the velocity of trade without compromising on privacy and security,” Sunil added.

Founded in 1973 in Bahrain, the Landmark Group has successfully grown into one of the largest and most successful retail organisations in the Middle East and India. An international, diversified retail and hospitality conglomerate that encourages entrepreneurship to consistently deliver exceptional value, the Group operates over 2,300 outlets encompassing over 30 million square feet across the Middle East, North Africa and the Indian sub-continent.

Landmark Group has a strong workforce of over 55,000 employees and provides a value-driven product range for the family through its retail concepts: Centrepoint, Babyshop, Splash, Shoe Mart, Lifestyle, Iconic, Max, Shoexpress, Home Centre, Home Box and Emax. In addition to the brands developed in-house, the Group also holds the franchise rights for some of the world’s leading fashion and footwear brands in the countries where it operates. The Group has also diversified in the leisure, food and hospitality with Landmark Leisure, Balance Spa and Salon, Citymax Hotels, Fitness First and Foodmark, the restaurant division, which operates the Group’s own and franchise food outlets.

HSBC is the largest and most widely represented international banking organisation in the Middle East, North Africa and Turkey, with a presence in 9 countries across the region. HSBC has operations in the United Arab Emirates, Egypt, Turkey, Qatar, Oman, Bahrain, Kuwait and Algeria. In Saudi Arabia, HSBC is a 40% shareholder of Saudi British Bank, and a 49% shareholder of HSBC Saudi Arabia for investment banking in the Kingdom. This presence, the widest reach of any international bank in the region, comprises some 350 offices and around 10,500 employees.

(Left to right) Sunil Veetil, Regional Head of Trade, HSBC Middle East, North Africa and Turkey; and Rajesh Garg, Group Chief Financial Officer, Landmark Group.

What is the Voltron initiative?

According to an announcement in May 2019, the Voltron initiative, built on R3’s Corda blockchain platform, has completed global trials which saw over 50 banks and corporates participate in the simulation of multiple digital Letter of Credit transactions across 27 countries on six continents. Voltron uses blockchain technology to reduce the time it takes to execute the entire process of paper-based Letter of Credit from 5-10 days to under 24 hours. 96% of participants in the trial said Voltron will accelerate their Letters of Credit process, improve efficiencies and reduce cost.

Traditional trade finance processes are largely paper-based, time-consuming and prone to risk. According to a survey of trial participants, 86% of firms believe such inefficiencies are increasingly becoming intolerable for both corporates and banks. As a result, 61% said they are likely to move trade flows to open account, a far more risky option for exporters.

Leading institutions including ABN AMRO, Alfa Bank, Banco de Crédito del Perú-BCP, Banorte, Bci, China Everbright Bank Hong Kong Branch, CIB, CommerzBank Commercial Bank of Qatar, Ekman & Co AB, LH TRADING, MUFG, Natixis, National Bank of Egypt, RBI, SABB, Scylla, Standard Bank, Societe Generale and The Saudi British Bank, participated in the six week trial of the trade finance solution. The trial was delivered by a partnership of Bain, CryptoBLK and R3 on Microsoft’s Azure cloud platform.

This trial builds on a number of successful live transactions on Voltron in 2018 and earlier this year. The transactions demonstrated the improved speed and reliability of Letters of Credit.

The Voltron application designed and built to be compatible with both Corda and Corda Enterprise, will replace the complex links and networks involved in the trade finance market by providing a shared and synchronised database of transactions between businesses across the world. This digital alternative is significantly faster, more reliable and cost-effective than current paper-based systems, reducing fraud risk and removing time-consuming reconciliation processes by providing a single, immutable record of a trade.

The greatest point which is necessary to be stated is having a holistic overview for the entire process of the DC lifecycle. Everything is done in the same interface, which is connected to all the workflow participants, information is shared instantly, what will significantly expedite the transaction, optimising working with documents, which could be rectified in an instant way should there be any discrepancies identified. Corda based DLT environment creates values to every participant, and works in a business logic named by R3 as I see what you see.

Launch of Voltron

In October 2018, the Voltron initiative launched the open platform for documentary trade, targeting production on R3’s Corda Enterprise blockchain platform in 2019. Bangkok Bank, BNP Paribas, CTBC Holding, HSBC, ING, NatWest, SEB and Standard Chartered in partnership with Bain, CryptoBLK and R3 launched the open industry platform, corporate customer pilot programme and technology partner programme on the Corda Network. Voltron’s initial aim was to use blockchain technology to bring significant efficiencies to transacting letters of credit.

Collaboration with corporate customers has been critical in shaping the initiative, with a successful live transaction with Cargill in May 2018 demonstrating the viability of the platform. Voltron is continuing to extend its corporate customer programme to undertake more live transactions and is in active discussions with a number of corporates.

Corporate customers will be able to connect with their banks and trading partners via a single, simplified channel, for both issuance of letters of credit and presentation-exchange of documents across an open network. In addition, trade documents produced on external networks by a corporate’s supply chain partners can be digitally sent, verified and processed in Voltron. This new model provides legal enforceability of title documents and greater digitisation across business networks on Corda, addressing the challenge of today’s digital islands bridged by paper-based processes.

The Bolero network and electronic Bill of Lading, eBL functionality is included at launch. The essDocs network and eBL solution will start the initial design and integration with the Voltron solution, with others to be added on a rolling basis.

Voltron will enable banks to speed up financing decisions and enhance the customer experience. The banks’ corporate clients can reduce internal operational procedures through less reconciliation with their trading partners and banks. To help lower barriers of adoption and create an open ecosystem, a unique partner programme is available to enable trade finance platform providers to offer a Letters of Credit solution on the Voltron business network.

Today’s trade finance solutions were built in siloes, adding significant risk, operational inefficiencies and costs into the process. With more banks and supply chain partners joining the system the widespread adoption of distributed ledger technology will reach critical mass more quickly.

Voltron is a blockchain-based open industry platform to create, exchange, approve, and issue Letters of Credit on Corda, R3’s blockchain platform. The eight founding member banks are Bangkok Bank, BNP Paribas, CTBC, HSBC, ING, Natwest, SEB and Standard Chartered. Voltron will improve the trade finance process by simplifying Letters of Credit, delivering shorter settlement times, instant discrepancy resolution and simplified sanctions screening. Voltron is inviting banks, technology partners, and corporates to join the network.

R3 is an enterprise blockchain software firm working with a broad ecosystem of more than 300 members and partners across multiple industries from both the private and public sectors to develop on Corda, its open-source blockchain platform, and Corda Enterprise, a commercial version of Corda for enterprise usage. R3’s global team of over 180 professionals in 13 countries is supported by over 2,000 technology, financial, and legal experts drawn from its global member base.


Key takeaways

Strategy

  • Landmark Group operates over 2,300 outlets across Middle East, North Africa and Indian sub-continent.
  • Voltron is a blockchain-based open industry platform to manage Letters of Credit on Corda, R3’s blockchain platform.
  • ReChainME is a blockchain platform initiated by Landmark Group resulting in transparency and accountability.

Cost

  • Need for paper is reduced inside retail supply chains which involve paper documents screened at multiple touch-points.
  • Participants could track progress of shipment in real-time, reducing time to complete the transaction by 12 days, 40% reduction.