The barrier for entry for mainstream companies to enter the cryptocurrency space has always been high due to the regulatory atmosphere. With the advent of better rules, several institutions are taking the plunge into crypto and blockchain.
Standard Chartered, one of the world’s most popular banks has decided to invest in a blockchain company to further its network developments.
On January 29, the bank announced that it will be investing in Contour to digitally create, approve Letters of Credit for the company. A letter of credit is issued by a bank to another bank to serve as a guarantee for payments made to a specified person under specific conditions.
Standard Chartered is slated to work with Contour to make the financial ecosystem faster and much more secure. Lisa Robins, the Global Head of Transaction Banking at Standard Chartered stated:
“Our investment into Contour underscores our commitment to forge partnerships and solve common industry challenges – taking paper out of the process while improving speed and accuracy. With our footprint across the world’s fastest-growing trade corridors, we have the unique opportunity to support our clients in achieving a more sustainable supply chain, by improving access to financing through paperless trade and simpler processes.”
Standard Chartered chose Contour because of its prowess to digitize the LC process from end-to-end. Contour will also be involved in the issuance, confirmation and documentation preparation for all LCs. At the same time, the bank will utilize its smart guarantee feature to enable the digitization process.
The blockchain startup stated that they will be approaching more banks to streamline their requirements. Contour is built on R3’s Corda blockchain and will also take the required help from the R3 team to bolster development. Apart from Standard Chartered, Contour also has partners in HSBC, ING Bank, Bain & Company among several others.
Contour had also conducted pilot tests in 14 countries where over 50 major banks and corporates participated. During the tests, it was discovered that the processing time for Letters of Credit had reduced by over 90 percent. This meant that the time for the final output reduced from 5 to 10 days to just under 24 hours.
Standard Chartered had run a program with Contour [then known as Voltron] back in August 2019. The bank had executed a pilot transaction with the PTT Group in Thailand that involved the first cross border LC in the oil industry.