HSBC, one of the largest financial players globally, has initiated a huge transition from paper to the blockchain. The bank is going to move $20 billion worth of assets to the blockchain in order to optimize procedures and services provided to clients.
Moving Assets To The Blockchain
Until now, HSBC recorded the majority of its private placement records on paper. However, this is a highly ineffective record-keeping method, so the bank has decided to give blockchain a try. By moving the assets to the blockchain, HSBC is trying to increase customer satisfaction and user experience.
Having these records in a distributed ledger is a cost-effective solution to an outdated record-keeping practice. Modern tech solutions like blockchain-based platforms are becoming increasingly popular. In order to move with current trends, many financial institutions are showing more interest in the benefits of blockchain technology
First Big Bank Implementation
HSBC is at 21st position according to the 2019 Forbes ranking of the largest banks in the world. The bank is also the first big international institution, and the largest in the UK, to invest in blockchain technology.
This is still a test-phase solution, as HSBC holds about $50 billion in assets, however, the amount has no competition when it comes to other banking investments in distributed ledger technology. About 40% of all HSBC asset records will be moved to the Digital Vault platform.
HSBC’s drive to become one of the first major banks to adopt blockchain technology is also influenced by predictions of the value of private placements. Keeping records in a digital format, on a distributed ledger will allow the bank to give customers instant access to their record sheets, and to their private placements. The global private placement market is expected to grow in the long term and HSBC predicts that its value will hit $7.7 trillion by 2020.
Considering this, the bank has decided to step up its record-management system by entrusting Digital Vault with its new custody platform built on the blockchain. Digital Vault is going to give HSBC customers the ability to receive real-time information on their assets. Until now, it was hard for investors to keep track of what changes took place in the private placement sector. This is due to the huge processing time paper records required. Now, with the digitization of some of these asset records, HSBC customers will be able to stay informed in the click of a button.
Banks And Blockchain Technology
HSBC is not the first bank to try and figure out how blockchain-based platforms can improve its operational structure.
Earlier this year, JP Morgan officially launched its blockchain-based token, the JPMorgan Coin. This move came as a surprise to the majority of market analysts. In addition, the bank has been very vocal against the adoption of cryptocurrencies. However, even JP Morgan recognized the benefits blockchain technology has to offer.
HSBC is now trying to implement the technology for the improvement of internal operations. This is yet another area where distributed ledgers are becoming a hit.