HSBC to use blockchain for $20bn asset-tracking platform

Global banking giant HSBC has announced plans to launch a blockchain-based custody platform in March 2020, according to a report by Reuters.

The platform, called ‘Digital Vault’, has been designed to digitise the current paper-based records detailing investor holdings and transaction histories.

The current system is time consuming and expensive, with multiple intermediaries required to process paperwork and oversee transactions.

Instead, records of private placement securities stored via Digital Vault will be accessible in real time, and investors can access their investment information in seconds.

HSBC aims to store records of $20 billion worth of assets through Digital Vault by March next year – 40% of the $50 billion worth of private placement assets it currently manages.

Speaking to Reuters, blockchain digital consultant Windsor Holden predicted that it would take over a year for HSBC to make significant savings from the platform.

Holden explained:

“I wouldn’t expect to see huge savings or huge efficiencies announced in the first year to 18 months.”

At present, it’s unknown whether HSBC has been working with a blockchain partner to provide the infrastructure for Digital Vault or if it is building its own proprietary technology.

HSBC is leading blockchain innovation

As one of the world’s largest banks, HSBC has been keen to stay on the bleeding edge of digital asset adoption, backing several ventures and firms in the blockchain space.

These include a strategic investment in blockchain start-up Axoni last November and using the Corda blockchain extensively in its trials.

In September, HSBC successfully completed the world’s first Chinese yuan-denominated letter of credit, using blockchain infrastructure by Corda to settle the transaction. The transaction took just 24 hours, as opposed to days with traditional infrastructure.

Similarly, the bank leveraged blockchain technology in January to settle $250 billion worth of foreign exchange transactions, processing 150,000 payments. HSBC calls its blockchain solution ‘HSBC FX Everywhere’.

It’s highly promising for the future of blockchain technology that a bank such as HSBC is exploring its use across all parts of its value chain.

You can read more about HSBC’s commitment to blockchain technology here.