An international consortium has jointly developed a blockchain technology-based prototype solution for business trade.

Using the Linux Foundation and open source hyperledger project blockchain fabric, Bank of America Merrill Lynch, the Infocomm Development Authority of Singapore (IDA) and HSBC have joined together to create a trading solution, which is being supported by IBM Research and IBM Global Business Services.

The application will aim to cut the time process for trade finance, which is both a labour intensive and time consuming process between sellers, buyers and banks, according to HSBC. The consortium’s app will mirror a paper-intensive Letter of Credit (LC) transaction by sharing information between exporters and banks on a private distributed ledger.

“A letter of credit conducted on blockchain enables greater efficiencies and visibility in trade finance processes,” said IDA assistant chief executive, Khoong Hock Yun.

“[There will be] visibility in trade finance processes, benefitting multiple parties across its value chain.”

The consortium plan to conduct further testing on the concepts commercial application, which HSBC global head of trade finance business, Vivek Ramachandran, said would help test and expand the blockchain engineering.

“For the first time, we can start to see how this technology might be used to solve the real-world challenges our customers face,” he said.

“Many people are talking about the theory of blockchain…our challenge is to take this from concept to commercial use.”