HSBC has announced plans to move billions in assets to a new blockchain-based custody platform by March 2020.
HSBC will transfer $20bn worth of assets to a blockchain-based platform named Digital Vault, Reuters initially reported on Wednesday (27 November). This transfer constitutes 40pc of the firm’s total assets.
The platform will digitise paper records of private placements by using blockchain to reduce the time it takes investors to make queries on holdings such as securities purchased on private markets. The records are normally paper-based and, according to Reuters, not standardised and therefore tricky to access. The company hopes to cut costs and maximise efficiency, though HSBC has yet to clarify the projected savings from the move. However, it has noted that the move seeks to capitalise on burgeoning interest in these kinds of investments.
Blockchain has been hailed as the ultimate disruptor of the financial sector, due to how the nature of the digital ledger system eliminates the need for middlemen, a function that banks have previously filled in most modern economy transactions.
In late October, HSBC interim CEO Noel Quinn announced plans to “remodel” large swathes of the bank to offset a disappointing Q3 revenue outlook which showed a 24pc decline in net profits. Quinn has also pledged to divest some of the businesses, which could threaten up to 10,000 jobs.
HSBC has been gradually incorporating blockchain tools into its business model for some time now: in January, it announced that it had settled three million foreign exchange transactions using a blockchain platform, amounting to $250bn in trades. The solution, called HSBC FX Everywhere, has been used to orchestrate payments across its internal balance sheets.
“Following successful implementation inside the bank, we are now exploring how this technology could help multinational clients – who also have multiple treasury centres and cross-border supply chains – better manage foreign exchange flows within their organisations,” commented Rchard Bibbey, interim global head of FX & commodities at HSBC, at the time.
In 2018, HSBC reportedly completed commercial cross-border trades using the We Trade blockchain platform, alongside other financial behemoths such as Deutsche Bank, KBC and UniCredit.
HSBC could not be reached for comment at time of publication.