Revolutionizing Letter of credit: The Role of FinTech in Transforming Trade Finance

Abstract

This report studies the current inefficiencies in the Letter of Credit (LC) process and explores the potential of blockchain technology to enhance trade finance operations. The study highlights the challenges of the traditional LC system, including delays, extensive paperwork, lack of transparency, regulatory complexities, and security vulnerabilities. These flaws contribute to inefficiencies that hinder the smooth transactions of international trade. To address these issues, blockchain technology offers a solution by introducing transparency, security, and efficiency through its distributed ledger system. Blockchain can simplify document verification, reduce processing times, and minimize fraud risks