Japanese banking giant Mizuho has completed and revealed details of a trade finance transaction between Australia and Japan over a blockchain.
Mizuho, one of Japan’s three ‘megabanks’, has completed a blockchain trial of a trade transaction involving an export of a shipment of goods from Japan to an Australian importer. “All related processes, from issuing the letter of credit to delivering trade documents were completed entirely via a digital platform using blockchain,” the banking group’s FinTech arm revealed [PDF]. The transaction also saw participation from insurer Sompo Japan Nipponkoa Insurance and the Marubeni Corporation, a Japanese trading conglomerate.
In drawing its conclusions, Mizuho underlined the benefits and hurdles of a blockchain-powered trade finance transaction.
Reduced times in the delivery of trade documents, from multiple days to a relatively-meager 2 hours is a significant advantage. As is the reduction in costs including labor due to document digitization. Blockchain technology’s core characteristic of increased transparency, offering a real-time snapshot of a transaction for participants is also seen as a benefit.
Among the drawbacks is the obvious hurdle of not being able to transmit trade information to parties who haven’t yet adopted or begun using the blockchain. Further, Mizuho also cited the importance of introducing international blockchain standards.
“Building on this trade transaction project, Mizuho aims to further explore the practical business application of blockchain/DLT and to offer technologically sophisticated, client-focused services going forward,” the banking group added in summation.
Mizuho has – much like its Japanese banking counterparts – trialed blockchain solutions in the past. A 3-month trial of securities transactions over a blockchain that concluded in February 2016 saw Mizuho claim it was “practically impossible to tamper with transaction histories” while shortening the timespan for cross-border securities from “three days to same-day settlement.”
Mizuho, notably an investor in Japan’s biggest bitcoin exchange bitFlyer, completed trials of its own digital currency earlier this year. The banking group partnered technology giant IBM to develop the digital currency in mid-2016. In December, the bank conducted a real-world experiment of using its digital currency to pay for a group dinner party at a restaurant.
Featured image from Shutterstock.
Last modified: May 21, 2020 9:42 AM UTC