# Processing trade letters of credit digitally

> Standard Chartered Bank conducted a pilot transaction for a letter of credit using the Voltron blockchain platform in August 2019. By digitizing document exchanges, processing time was reduced from the usual five days to under twelve hours. The underlying Corda technology enabled confidential, audit-proof data synchronization between the participating trade partners.

**Sector:** Tertiary sector · **Industry:** Banking and financial services · **Organisation:** Standard Chartered Bank · **Maturity level:** Pilot

Canonical URL: https://www.sapientblock.com/en/use-cases/standard-chartered-bank-akkreditivprozesse-aussenhandel-digital-abwickeln

## Documentation status

- **Project status:** Pilot
- **Evidence:** Evidence medium
- **Editorial review:** pending

## Description

Standard Chartered Bank tested the fully digital processing of letters of credit via a distributed ledger with the Voltron initiative. A letter of credit secures global goods flows by the importer’s bank guaranteeing payment to the exporter once the submitted trade documents have been contractually verified. Traditionally, this requires days of error-prone shipping of paper documents, which is reduced to a few hours through shared data exchange on the platform.

In August 2019, Standard Chartered Bank demonstrated through a transaction how the process of a traditional letter of credit can be revolutionised. While conventional letters of credit take up to five days due to postal delivery and manual checks, the Voltron pilot completed the same process in less than twelve hours. The solution is based on the Corda technology from the R3 consortium, which is specifically designed to meet the strict data protection and regulatory requirements of the financial industry. All participants in the network only have access to transaction data for which they have explicit permission, thus preserving banking secrecy and business data. The successful pilot case highlighted the enormous potential for risk reduction, increased transparency and accelerated liquidity in global trade finance.

## Benefits

- Faster release of goods and improved liquidity
- Lower administrative processing costs
- Minimised risk of document forgery
- Reduction of processing time from up to five days to under twelve hours
- Elimination of delays caused by physical document shipping
- Tamper-proof and traceable process steps
- No manual document reconciliation required
- Clear digital verification process in real time

## Challenges

- Integration into existing internal ERP and processing systems
- Alignment of common technical and business standards
- Need for broad participation of all global trade partners and banks
- Legal recognition of digital trade documents in different jurisdictions
- Transition of established working habits from paper documents to digital platforms

## Technology foundation

The Voltron platform is based on the Corda distributed ledger technology from R3, which was specifically developed for regulated financial institutions and enables selective, encrypted data exchange only between directly involved parties.

## Sources

- [Standard Chartered, HSBC complete Letters of Credit on Voltron](https://www.ledgerinsights.com/voltron-blockchain-standard-chartered-hsbc-letters-of-credit/)
- [Standard Chartered Completed a Letter of Credit Transaction on the Voltron Blockchain Trade Platform](https://chainbulletin.com/standard-chartered-completed-a-letter-of-credit-transaction-on-the-voltron-blockchain-trade-platform)