‘Big Four’ professional services firm Deloitte has unveiled a partnership with Hong Kong’s central bank, as part of its drive to develop a trade finance blockchain for the Hong Kong market.

The announcement comes following the completion of successful tests of the blockchain, which is designed to reduce friction by digitizing the paperwork involved in trade finance arrangements.

In addition to involvement from the Hong Kong Monetary Authority, the project has also drawn contributions from the Bank of China, Hang Seng Bank, the Bank of East Asia, Standard Chartered and HSBC.

The trial spanned across the supply chain, ranging from banks to suppliers to buyers to logistics, allowing for the smooth flow of capital through trade finance arrangements throughout the chain.

The trial specifically focused on tackling the legal and regulatory dimensions, as well as honing in on security and data compliance – essential ingredients ahead of any viable mass adoption of this type of technology.

The group, spearheaded by Deloitte, said the trials demonstrate the potential effectiveness of blockchain based solutions for handling these types of commercial arrangements in a more efficient way.

“This proof of concept has demonstrated the application of DLT in digitizing paper-intensive processes through smart contracts, reducing the risk of fraudulent trade and duplicate financing, and improving the transparency and new product innovation of the industry as a whole.”

As the project moves into its next phase testing, some members of the group behind the development are introducing live clients into the framework.

Standard Chartered has said it will consider inviting clients to participate in the next stages of the ongoing trials, which it is hoped will make trade finance in Hong Kong more streamlined in the future.

An essential lubricant across many different supply chains, trade finance allows suppliers and partners to issue short term credit lines to their customers, ensuring essential cash flow from origin to market.

With blockchain based technologies capable of removing much of the currently antiquated processes involved in trade finance agreements, it is hoped the technology will make it easier to do business in Hong Kong, and with Hong Kong based companies.