HSBC facilitates first blockchain transaction for Middle East automotive industry

HSBC has executed the first blockchain transaction for the automotive sector in the Middle East. The transaction, enabled by blockchain platform Contour, was between Chinese automaker SAIC Motor and Taajeer Group, the authorized dealer of MG cars.

HSBC-backed blockchain platform accelerates trade finance processes by 10x

The Middle East’s automotive sector has just registered its first blockchain transaction. The payment, facilitated by British bank HSBC, was made on the Contour platform, a decentralized network that connects banks and companies, allowing paperless trade and trade finance.

The transaction was between China’s largest car manufacturer SAIC Motor and Tajeer Group, the exclusive agent for MG cars in Saudi Arabia. This is the first blockchain transaction for the region’s automotive industry, but also for Saudi Arabia.

“Our digitization at scale means making our customers’ lives easier, and with Contour, that means we’re cutting costs, reducing risk and speeding up commerce. Bringing these benefits to the automotive sector and Saudi Arabia is a measure of our international connectivity and our global leadership in merchant banking.”

– Chaker Zeraiki, Head of Global Trade & Receivables Finance for HSBC UAE

Thanks to Contour’s underlying technology, digitizing the credit documentation for the transaction was 10 times faster than using physical documents, HSBC said in a statement. HSBC, a proponent of blockchain and central bank digital currencies (CBDC), claims that distributed ledger technology (DLT) can reduce transaction times from 5-10 days to under 24 hours.

Moreover, the blockchain technology that powers the Contour platform makes the transaction more secure as data shared between users is transparent and irrefutable. Thanks to faster transaction times and better security, DLT will allow more trade and a higher number of transactions in the future, HSBC said.

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What is Contour Network?

Introduced in August 2022, Contour is a decentralized network that connects banks and businesses for trade finance and paperless transactions. The network was developed by a consortium of eight banks, including HSBC, and three delivery partners.

The primary objective of the platform is to create a single channel that allows digitization of the trade finance process. Contour had a successful beta phase in 2020, where over 20 global banks and 75 companies participated.

HSBC’s first blockchain transaction in the Middle East comes less than a year after the bank teamed up with the Core-FX blockchain platform to facilitate bilateral foreign exchange (FX) transactions. In 2019, the bank settled $250 billion in Forex trades using its “FX Everywhere” blockchain platform.

Do you think blockchain technology will enter the mainstream in the Middle East? Let us know in the comments below.

About the author

Tim Fries is the co-founder of The Tokenist. He has a B. Sc. in mechanical engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate in the investment team at RW Baird’s US Private Equity division and is also a co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.