London-based bank and financial services firm Standard Chartered came out of the closet in support of Blockchain technology as it completed its first cross-border blockchain letter of credit transaction. This one is a first in the entire oil industry with Thai state-owned oil giant PTT Group.
Standard Chartered completed a pilot letter of credit (LC) transaction for PTT Group, PTT International Trading Pte Ltd and IRPC Public Company Limited using the Voltron (the coolest name you’ll read in this paragraph) blockchain platform. Oil companies are often reliant on letters of credit as a form of short-term trade finance. Obviously, if you’re using something which sounds cool and is controversial in different parts of the world, it’s normal to pay a small price.
“This process is paperwork-intensive and requires up to five days for the delivery of these documents.”
The company claims that this pilot included digitizing and simplifying the end-to-end exchange of information between all parties in a shipment of an oil product from Thailand to Singapore. Think of it as a very elaborate WhatsApp group where (like all WhatsApp groups) this planning spanned a total of 5-days. The issuance, advising, and negotiation of LC and presentation of documents have all reportedly been managed on the Voltron blockchain platform itself.
The parties involved could follow the transaction in real-time, which resulted in a significant speed-up of the process, so much so that it ended in under 12 hours. Managing Director at PTT Supasachi Hongsinlark commented on the development:
“The system will provide more visibility to monitor trade finance flow in real time, which will improve transparency and credibility for the trading process and thus strengthen the relationship between our partners and stakeholders in the long run.”
What remains now to be seen is how well companies from the oil industry follow suit.