The Bank of America Merrill Lynch, HSBC and the Infocomm Development Authority of Singapore (IDA) used open source Hyperledger software to create an app that replaces the paper-based transaction, they said in an emailed statement.
Information is shared between exporters, importers and their respective banks on a private distributed ledger, and a trade deal is executed automatically through a series of digital contracts, the statement said.
Each of the parties involved - the exporter, importer and both of their banks - can visualise data in real time on a tablet and see the next actions to be performed. Each action in the workflow is captured, giving transparency to authorised participants whilst encrypting confidential data, the consortium said.
Blockchain distributed ledger technology is best known for underpinning trading involving the digital currency bitcoin, but it has many other potential uses. Broadly it can be likened to a type of database that, using cryptography, can be operated as a digital public ledger for recording information, such as the transfer of assets between two or more parties.
The banking proof of concept shows that there is potential to streamline the manual processing of import / export documentation, improve security, increase convenience and make companies' working capital more predictable, the consortium said.
Further tests will now be carried out with selected partners.
Fintech expert Luke Scanlon of Pinsent Masons, the law firm behind Out-Law.com said: "Use of a distributed ledger in the context of trade finance highlights the wide scope of potential for innovative solutions that can replace paper-based processes with digital ones. Whether a distributed ledger is the best solution or not in this specific context remains to be seen, but these trials do put positive pressure on regulators to remove barriers in regulation which cause friction in transacting online or otherwise at a distance."
Ather Williams, head of global transaction services at Bank of America Merrill Lynch, said: "We are continuously looking for ways to simplify and improve transaction processing for our clients. Blockchain has reshaped our thinking on how to make transaction processes more efficient and transparent for all parties. The success of this proof of concept is a significant development towards digitising trade transactions, potentially resulting in considerable benefits to the supply chain process."
Vivek Ramachandran, global head of product for HSBC's trade finance business, said: "Many people are talking about the theory of blockchain, but for the first time we can start to see how this technology might be used to solve the real world challenges our customers face. It's really exciting to have a valid proof of concept. Letters of credit are an important part of the trade system, but they are based on 20th century technology, not 21st. Our challenge is to take this from concept to commercial use; making it quicker and easier for businesses to connect with new suppliers and customers at home and abroad."
In January this year a report by the UK government's Office for Science identified many potential uses beyond financial services for distributed ledger technology. It said the technology could be used by the UK government to support access to welfare, reduce tax fraud and protect the UK's critical infrastructure, among other examples.
"Distributed ledger technologies have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services," Mark Walport, chief scientific adviser to the UK government, said in the report.
"In the NHS, the technology offers the potential to improve health care by improving and authenticating the delivery of services and by sharing records securely according to exact rules. For the consumer of all of these services, the technology offers the potential, according to the circumstances, for individual consumers to control access to personal records and to know who has accessed them," he said.