HSBC Moves $ 20 Billion Assets to Blockchain Platform
Blockchain and banking continue to advance new boundaries with the comparatively unproven technology claiming lots of promise and potential, but not finding too many direct uses, as of yet. One of the largest banking and financial services organizations in the world, HSBC, which is headquartered in London, is intending to make a bold $20 billion step.
The bank will be shifting $20 billion value of assets to a new blockchain-based custody platform by March. It is a massive improvement of the previous system as the HSBC platform will digitize paper-based records of private placements.
Private placements are generally held on paper and lack uniformity, which not only makes accessing them complicated and incompetent but also points towards an antiquated and out-dated system.
Adopting blockchain to reduce the time it takes investors to make checks or queries on holdings, the new HSBC platform, known as ‘Digital Vault,’ will give investors real-time access to records of securities acquired on private markets.
Presently, the bank takes care of $50 billion worth of the assets, so it is taking a significant risk by putting 40% of this on the blockchain platform.
It is not only a vital upgrade for private placements, but it is also a necessary one in an avenue that is supposed to grow and be more attractive to investors unwaveringly. Demand for private placements of debt and equity has increased significantly in recent years. Investors are on the quest for higher returns between low-interest rates across the world.
HSBC estimates the global value of private placements to hit ‘$7.7 trillion’ by 2022, a jump of 60% from the past five years. Simultaneously it thinks allocations by asset manager clients will grow to 20% from 9%, it was reported.
It has become evident with the evolution of blockchain technology that there is a lot that can be gained for banks should they decide to adopt the progressive technology. The equivalents of JP Morgan have gone from slating Bitcoin to designing their cryptocurrency.
The usage of paper record-keeping for assets that value $50 billion is hugely profitable. Banks are now starting to recognize that the next step in this evolution is not taking what’s on offer; it is about setting the trend.
HSBC’s choice to put $20 billion worth of assets onto blockchain technology is being announced as one of the most significant deployments to the transparent and instantly accessible technology. But, its success will not be immediately visible, according to ‘Windsor Holden,’ an independent consultant who pursues blockchain and cryptocurrencies.
“I wouldn’t expect to see huge efficiencies or huge savings announced in the first year to 18 months,” he stated.