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HSBC is set to transfer the records of about $20 billion of its assets to a blockchain solution dubbed Digital Vault.
As blockchain technology goes mainstream, HSBC has decided to shift its records from being paper and centralized based to the blockchain. Sources indicate that this shift will enable the numerous clients of the financial institution to be able to access their records in real-time on the blockchain solution that the institution will be employing. The investment bank that about $20 billion of its assets will be shifted unto the blockchain solution.
Referred to as Digital Vault, it is expected that the platform will enable the various investors to access the records stored in its ledger as regards the securities that have been purchased in private market sources suggest. It also improves significantly the process of digitization which has for some time bogged down financial institutions as real-time updating is one significant feature that has made many to consider blockchain technology as one way forward in record keeping.
With a significant reduction in the cost of deployment (though HSBC is yet to quantify this in terms of money), blockchain technology will enable the creation of a new value chain model where unnecessary middlemen in the information flow will be removed.
This isn’t HSBC’s first foray into the blockchain space. Earlier reports have indicated that the bank has already settled over $250 billion in foreign exchange transactions this year using its HSBC everywhere platform. This, of course, indicates that financial institutions are actively looking towards working with blockchain technology to significantly improve their processes, reduce costs while at the same time increase security as well.
The bank also believes that the demand for private placements of securities in terms of debt and equity will increase over the next few years as it has been growing at a faster rate than usual in recent times. The bank further presumes that the total value of private placements will increase significantly by 60 % to $7.7 trillion by 2022. The bank also considers that the allocations by asset managers will also increase to 20% from 9%.
This, of course, gives a unique opportunity for those who are into decentralized ledger systems to take the bull by the horns so that they can take advantage of this unique opportunity to bring DLT to the World. While many people are still unsure of the unique advantages to be offered by the implementation of DLT, the truth remains that the cost factor alone in terms of deployment, upgrades, maintenance, security, transparency, and integrity of data stored in decentralized ledgers are too obvious to ignore.
Most of the opponents of decentralized systems consider the fact that there isn’t any central authority in the setup of DLTs. However, it is the trustless nature of the system that makes all the difference, which is something that HSBC wants to employ with its clients as custodians of their assets.