HSBC Track $20 Billion Worth Asset by Swapping Records for Blockchain
HSBC has announced that they will shift assets of worth $20 to new blockchain-powered custody by March in 2020. This created a lot of hype in the banking sector. Though blockchain technology is proven to reliable; still no leading bank has gone that far to test this revolutionary technology.
The name of the platform with which the HSBC has collaborated for this unique venture is Digital Vault. The objective of this partnership is to provide real-time access to investors when it comes to the critical safety records bought on private markets, and this is what the HSBC told the Reuters. Moreover, the HSBC bank has taken this step to tap on the soaring interest of results-driven investors internationally.
Over the past decade, top financial institutions and leading banks worldwide have been investing big money to identify the limitless potential of Blockchain technology. They are seeking a digital ledger that can be updated instantly and transparently. However, only a few of them have been successful in developing a practical blockchain-empowered solution.
Proponents hold the belief that Blockchain technology is the future ahead for the global banking factor. According to them, Blockchain can reduce the cost of processing each transaction, by cutting down on the need of having a middleman. And, in the recent past, there have been several examples of successful implementation of the Blockchain technology in various industries.
The HSBC has ventured into this Blockchain revolutionary banking mechanism with the pursuit of digitizing paper-based records. Here, the Blockchain technology will play a central role by allowing investors to quickly and effectively have an inside look at the holdings.
As of HSBC, the private-placement records are there over the paper, and there isn’t any standardization done. Thus, this makes the entire process both baffling and time-consuming. According to HSBC, at present, they are maintaining assets worth $50 billion.
The HSBC isn’t clear how revolutionary this project is going to be in the coming years. Furthermore, the bank was unable to put forth an estimate of how much the cost will be reduced both for the bank or the clients via the Digital Vault.
It has been seen the demand of private-placements of both equity and debt has swelled considerably in the last couple of years as the investors worldwide after higher returns amidst the low-interest rates.
According to the HSBC experts by the year 2022, the private-placements are going to hit the mark of $7,7 trillion, a massive leap of 60% in the last five years. Over the same period, it is anticipated that the asset manager clients to grow from 9% to 20%.
The head of the recent custody venture, Ciaran Roddy, said the interest of the private placements has grown from the various parts of the world, stretching from the US, British Insurers, Asian as well the Middle East sovereign funds.
"With some of the yields that are on offer, we are seeing an increase in demand," he said.
This big news has come when the interim manager of the HSBC bank, Noel Quinn, is seeking new ways to cut down on the unnecessary costs and raise the interest in the business.
As per an independent crypto and blockchain analyst Windsor Holden, the savings were quite unlikely during the initial phases of this custody venture,
"I wouldn't expect to see huge savings or huge efficiencies announced in the first year to 18 months," he said.