The risk posed by fraud in the $4 trillion trade-financingindustry has prompted banks to start exploring distributed-ledgertechnology like the one that underpins bitcoin.

Standard Chartered Plc, which lost almost $200 million from afraud at China's Qingdao port two years ago, has teamed up with DBSGroup Holdings Ltd. to develop an electronic ledger of invoicesthat uses a parallel platform to the blockchain employed in bitcointransactions. Lenders such as Bank of America Corp. and HSBCHoldings Plc say they're looking at blockchain for trade financeand other banking applications.

Blockchain proponents argue that the technology will change theface of banking, helping lenders cut billions of dollars in costs.Trade financing, a centuries-old banking mainstay, may becomeground zero for blockchain adoption because it promises to do awaywith paper invoices and the fraud that accompanies them — if bankscan come together around a joint platform.