Military Bank (MB) has become a leading bank in Vietnam to successfully execute the complete life cycle of two blockchain-enabled import letters of credit (LCs) over the CONTOUR network.
Instead of implementing the process on different systems, MB and Bangkok Bank (Thailand) have pioneered the application of blockchain technology, allowing the entire process of delivering Letters of Credit (LCs) services, from LC issuance to documents presentation and documents status notifications, to be proceeded on one unified network, CONTOUR. Stakeholders, including exporters, importers, issuing bank, and advising/presenting bank, are permitted to execute transactions on one network.
The most significant advantage of this method compared to the traditional executing of the LCs is that all stakeholders are allowed to track the real-time status of the transactions, securing the integrity and transparency of information, as well as improving processing time and saving costs for the entire cycle. This, therefore, can be said to be a turning point in the implementation of LCs, the most important payment service in the field of trade finance.
Blockchain-enabled technology is proving itself to be a highlight in improving the sustainability of international trade. Vu Hong Phu, member of the MB Board of Management, said: “The application of blockchain in import LC transactions in Vietnam once again affirms MB's desire to compete at the continental level and to bring the image of MB as a dynamic, modern bank with remarkable digital transformation closer to the world.”
“With its positive impacts, blockchain technology has been increasingly implemented in various fields to foster international trade. As a business with the core values of Intellectual – Honest – Dedicated – International, Opec Plastics highly appreciates the proactiveness of MB’s leaders and staff in applying new technology. In the future, we will support the promotion of international transactions transparency by forming partnership with financial institutions, including MB, in the deployment and replication of blockchain-enable technology solutions,” said Dinh Duc Thang, president of Opec Plastics JSC, a pioneering enterprise in Vietnam in implementing blockchain technology.
“The most significant change is time," said Vo Xuan Huong, director of Sai Gon Plastic Chemical JSC, one of the two import enterprises that got hands-on experience on blockchain technology. He stressed: “It took days to complete each stage. Now, each step is completed in less than one hour, which helps us optimise the process of importing goods and save cost. In addition, all stakeholders share the same responsibilities, and all activities are transparent on the network.”
Known as a bank that aims to bring its customers the best experience, MB has been at the forefront of applying new technologies in international payment services. Its online international money transfer has been rolled out since August 2020. MB’s international money transfer service has been acknowledged to meet Swift GPI standards since 2019. Customers using this service at MB are updated with successful transaction status in real time. More noticeably, up to 90 per cent of transactions are processed within one day. For some markets like the US, the majority of transactions are credited within an hour.
Initial success in executing the complete life cycle of two import LCs applying blockchain demonstrates MB’s efforts in adopting new technology in order to provide customers with high-quality international payment and trade finance services in the context of the banking industry increasingly embracing digital transformation.