Contour launches Bangladesh SME trade finance network

Blockchain trade finance initiative Contour has launched a domestic network in Bangladesh that may provide digital letters of credit (LCs) to SMEs in the united states.

Owned by eight shareholder banks - Bangkok Bank, BNP Paribas, Citi, CTBC, HSBC, ING, SEB and Standard Chartered - Contour delivers a global network for trade finance over distributed ledger, which allow parties to transact and view information electronically.

Contour’s central offering is the LC, that the network has were able to reduce processing time by as much as 90% during testing, from typically 10 days to under a day end-to-end. Since going are in October this past year, Contour’s members have been attempting to scale up the network, with Vinay Mendonca, global head of product, propositions and structuring, trade and receivables finance at HSBC, telling GTR that HSBC is asking its financial institution clients - particularly in large documentary credit issuing markets such as for example India, Vietnam and Bangladesh - to become listed on the platform and support flows.

With this new launch, Contour is tackling adoption from the ground up. Through a purpose-built network, Contour will offer you digital LCs to SMEs in Bangladesh for local and international transactions.

“This is still part of Contour’s network,” Carl Wegner, CEO of Contour, tells GTR. “The key difference is that is a domestic offering for companies and banks to conduct local transactions within an affordable way, making our platform accessible to corporates of most sizes in Bangladesh. Previously, we've primarily centered on cross-border trade. The network allows these local businesses to tap into Contour’s global network because they grow and expand their own footprint. For local banks, it’s an possibility to test the system locally first but get access to the growing global network now of 13 banks in 25 countries.”

Bangladeshi corporates and banks have previously demonstrated enthusiasm in taking on blockchain technology for LC transactions, and Contour has made significant inroads on the market.

August this past year saw Standard Chartered execute the country’s first blockchain LC transaction over Contour, and this was swiftly followed by its first interbank blockchain LC, between Bangladesh’s Prime Bank and HSBC. Meanwhile, earlier this season, Dhaka-headquartered City Bank executed the first-ever cross-border Islamic blockchain LC, in partnership with the International Islamic Trade Finance Corporation (ITFC).

“Bangladesh is one of the top LC markets on the globe, with LCs being a trusted trade finance instrument for domestic transactions in the country,” says Wegner, adding that Contour aims to be Bangladesh’s main digital trade finance network.

Contour says it now plans to onboard a lot more than 50 corporates supported by Bangladeshi and international banks in the next half a year, and adds that it looks forward to “further accelerating banks and corporates with tailored propositions for individual countries in the future”.