Earlier this month HSBC bank announced it had performed the world’s first trade finance transaction using a single blockchain platform.

In a push to boost efficiency in the multi-trillion-dollar funding of international trade, the bank issued a letter of credit for U.S. food and agriculture firm Cargill. The trade finance transaction involved a bulk shipment of soybeans from Argentina to Malaysia. via the global commodities trader’s Geneva and Singapore subsidiaries. The British lender said in a statement. The letter of credit was issued from HSBC to Dutch lender ING. Letters of credit are issued by one bank to another to guarantee that a payment will be received by a seller under a set of conditions.

Blockchain technology promises to significantly reduce the amount of time taken and  the paper records that go to and from the parties involved,

HSBC said, that while there have been other trade finance deals that use blockchain in conjunction with other technologies, the Cargill transaction marked the first use of a single, shared digital application rather than multiple systems.

Using blockchain technology in the banking sector is expected to reduce risk, i.e., fraud as well as cutting down on the number of steps needed to complete a transaction. Letters of Credit are the widely used way of financing between importers and exporters, helping guarantee more than $2 trillion worth of transactions.

Traditionally, the transaction process leaves a long paper trail and takes between five and 10 days to exchange documentation.

A statement issued by HSBC said, “Putting all of Asia Pacific’s trade-related paperwork into electronic form could slash the time it takes to export goods by up to 44 percent and cut costs by up to 31 percent.” They cited a study by the United Nations.

Vivek Ramachandran, global head of innovation and growth, at HSBC’s commercial banking unit, told the news agency Reuters, “The reason why letters of credit have persisted is because of two real challenges — the absence of digital infrastructure and the challenge of coordinating multiple parties.”

“This platform helps us overcome the first and I think the technology and everyone focused on it gives us the impetus to go after the second now with hopefully much better results than we have seen in the past.”

Ramachandran said HSBC already had another client lined up for the next similar transaction.

Blockchain is a technology using a ‘distributed ledger’ and is maintained by a network of computers rather than a centralised system, which verify transactions. The blockchain application used here is supported by 12 banks. This could help the technology have a broader market.

HSBC said the transaction was executed on a platform called Corda, which was developed by R3, a New York-based blockchain consortium whose members include more than 100 banks, regulators and trade associations.