HSBC to trace up to $20bn worth of assets via blockchain
British financial conglomerate brings paper-based records of private placements online
British financial conglomerate will use blockchain to provide access to records of securities bought on private markets. According to Reuters, the total amount of assets stored on blockchain will be worth $20bn (£15.5bn, €18.2bn).
The data on private placements is normally kept offline, which hinders access for investors. HSBC eyes replacing its paper documentation with a new blockchain infrastructure called Digital Vault by March 2020.
The platform will allow investors to check records of private placements online. The company believes that the use of technology will significantly reduce time spent on this type of work and allow it to cut costs.
Currently HSBC is looking after up to $50bn (£39bn) worth of such assets. The company believes that by 2022 the global amount of private placements will reach $7.7tn, which means a 60 per cent increase from five years earlier. According to HSBC, the interest in private placements is constantly growing in the US, UK, Asia and Middle East.
The company has not yet calculated the benefits that blockchain could bring to its business. However, Windsor Holden, an independent crypto consultant cited by Reuters, believes that huge savings in the nearest future are impossible.
HSBC has been testing blockchain in various areas for a while. For instance, during the collaboration between HSBC Hong Kong and Landmark Group, a Middle Eastern retailer, the companies found out that blockchain could cut transaction costs by 40 per cent.
More recently, HSBC and other major banks, such as Standard Chartered, developed a blockchain-based trade finance platform – eTradeConnect – that is backed by the central banks of Hong Kong and China.