Fraud in $4 Trillion Trade Finance Has Banks Turning Digital
- Technology may help address risk of multiple-invoice fraud
- Challenge is getting banks to agree on common platform
A cargo ship berths at a port in Qingdao, east China's Shandong province on March 8, 2016. China's exports saw their heaviest fall in nearly seven years in February, diving more than a quarter as feeble global trade offset the weaker yuan and raised pressure on Beijing to ramp up domestic demand as a driver of expansion. / AFP / STR / China OUT (Photo credit should read STR/AFP/Getty Images)
Photographer: STR/AFP/Getty ImagesThe risk posed by fraud in the $4 trillion trade-financing industry has prompted banks to start exploring distributed-ledger technology like the one that underpins bitcoin.
Standard Chartered Plc, which lost almost $200 million from a fraud at China’s Qingdao port two years ago, has teamed up with DBS Group Holdings Ltd. to develop an electronic ledger of invoices that uses a parallel platform to the blockchain employed in bitcoin transactions. Lenders such as Bank of America Corp. and HSBC Holdings Plc say they’re looking at blockchain for trade finance and other banking applications.