Global banking group HSBC has announced what it claims is the world’s first commercial trade finance transaction using blockchain technology. It covered a shipment of soybeans transported last week from Argentina to Malaysia.

HSBC handled the deal for US food and agricultural group Cargill, in partnership with Dutch bank ING. Both used the Corda blockchain platform developed by distributed database technology group R3, which is backed by a consortium of banks that include HSBC and ING.

The bank said that transferring all of Asia Pacific’s trade-related paperwork onto the blockchain could reduce the time of exporting goods by up to 44% and cut costs by up to 31%. It added that a transaction of this kind typically took between five and 10 days for the full exchange of documents, but the Cargill blockchain transaction was completed in 24 hours.

“This is an inflection point for how trade is conducted,” commented Vivek Ramachandran, global head of product and propositions for HSBC’s trade and receivables finance business. “With blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous.

According to HSBC, blockchain “can pull trade into the digital age”. The group added that the Cargill transaction can be replicated and the technology is ready to be adopted by other industries to make trade finance deals can be simpler, quicker, more transparent and more secure.

Ramachandran acknowledged that blockchain must first overcome several obstacles before it becomes an efficient and legally compliant technology. Each country has different laws, so policymakers would need to make changes to enable its use across borders.

However, a closed system where transactions are only visible to registered buyers and sellers could be possible within five years, he suggested. “It is only by working together that we will create a platform that all those involved in trade want to use, from banks, exporters and shippers to regulators and lawmakers.”

Blockchain was also used by ING for a shipment of soybeans in January this year. The shipment, from the US to China, was carried out by Louis Dreyfus Co. via the Easy Trading Connect (ETC) platform and became the first fully-fledged agricultural trade conducted using blockchain.