Last week the two big blockchain consortia, R3 and the Hyperledger Project, seemed to be racing each other to release proofs of concepts for doing essentially the same thing. Both initiatives were exploring how distributed ledger technology could streamline the pricey, paper-based and antiquated world trade of finance, involving banks and letters of credit.

The Linux Foundation-backed Hyperledger Project proof of concept comprised HSBC, Bank of America Merrill Lynch and Infocomm Development Authority of Singapore, with added support from IBM.

The R3 initiative involved 15 of its member banks. Regarding any duplication with R3, Vivek Ramachandran, global head of product for HSBC's trade finance business, made a sanguine appeal for collaboration between technology builders, as well as the rest of the industry.

He told IBTimes UK: "My view is that we will all have to come together because this has to be industry led, the ecosystem has to adopt it. HSBC is part of R3 and we are working with R3 on some projects too. The whole industry has to come together to build this out."

Asked if he thought there was anything significantly different between R3 Corda's trade finance proof of concept and the HSBC/Bank of America Merrill Lynch project (other than the number of banks talking part), Ramachandran said: "If I'm honest, I haven't gone into the technical details of the R3 project. We were aware of some of the work they were doing. We were quite far along, which is why we decided to go ahead and finish the work we were doing.

"I think now we need to get the technical teams together to understand the pros and cons, because part of what we have learned is also the technical limitations of distributed ledgers, in terms of the number of nodes you can have or the quantity of data you can have on it. So now may be the time to share those and see how we can put our heads together to take this to next level."

"The fact that R3 and ourselves worked on it at the same time might suggest competition, but the future is going to be about collaboration in this space."

Ramachandran said it's difficult to talk about a distributed shared ledger that's not distributed or shared. R3 echoed his sentiment, issuing to IBTimes UK this statement: "The whole R3 ethos is based around industry-wide collaboration and partnering with complementary technology providers in order to advance this technology in a manner that benefits all types of financial market participants.

"R3 is a member of the Hyperledger initiative and as such we will continue to explore ways to utilise the code being developed by its open source community in the real-world products we are developing with our consortium members."

Trillions of dollars in global trade is conducted on a documentary basis. It involves banks or other intermediaries checking and moving physical pieces of paper around to validate a transaction, so buyers and sellers are comfortable with exchange of monies at any point in time. The letter credit has been around for over 100 years and it has survived because there hasn't been an alternative instrument that can mitigate trust issues between a buyer and seller.

Ramachandran sees many participants working in this space coming together, not just the banks, but also shipping companies, customs authorities, and obviously the corporates themselves to adopt the changes and drive it.

"Our incentive to working with another bank is obvious. But working with the Infocomm development authority of Singapore is important because it's good to have a government body to embrace this technology and drive it," he added.

The HSBC and Bank of America Merrill Lynch proof of concept was based on four nodes – importer, exporter and the respective banks – built on Hyperledger with an iPad interface.

"The importer inputs the information that he would like to see the exporter provide and it allows for light tracking of where you are along the cycle and that information is transmitted by the importer's bank and exporter's bank.

"Then the exporter uploads images of the accompanying documents and on this proof of concept the image is actually stored on the distributed ledger. I think one of the enhancements over time might be having the images outside with a hash or a reference to the relevant image, which would make the ledger more scalable and nimble.

"There are a few things which I think are quite important that we work on. The client interface is important because a lot of the small companies find it difficult to adopt new technology. Hence our focus on iPad interface and make it very user friendly."

As well as banking consortia attention, there are other innovators working on global trade and blockchain, such as fintech startup Skuchain, which is backed by Digital Currency Group, as well as China-based blockchain VC, Fenbushi Capital.

Skuchain uses the term "collaborative commerce" whereby blockchain enabled trust could connect new realms of commerce and enable the sort of vertical integration only seen in Chinese mega platforms like Alibaba or Xiaomi; this is also the way companies like global trade and energy giant Maersk see the future.

Skuchain also points out that usually trade happens between a first world and an emerging country, and it's the latter that often ends up paying more for credit, using factors for instance. So it's about evening the odds, as well as helping banks move on from paper.

Ramachandran said: "I think people like Skuchain and other fintechs we'll have to work with them. This technology is evolving so quickly and there is so many parts to the problem, so the more minds we put together the better.

"In terms of emerging markets versus developed markets, you see letters of credit used a lot more in many of the Asian markets and the requirement for credit enhancement or risk mitigation is higher in many cases.

"If you are selling to a small counterparty you don't want to necessarily take on some of their risk on your balance sheet. But equally if you have two large corporates trading with each other there is a limit to how much exposure you want against each other. And the only one way to mitigate that today is with a letter of credit."