HSBC, the largest bank in the UK, has announced plans to seriously start using blockchain technology to manage assets.
According to financial wire Reuters, HSBC will move $20 billion worth of assets into a blockchain-based vault called Digital Vault. The huge cache of assets accounts for 40 percent of the bank’s total holdings and will be transferred in sections over the coming months.
HSBC hopes to use the Digital Vault system to improve efficiency and cut costs by digitizing records that are currently cumbersome to store and access. Blockchain presents a unique method that can make records easily accessible while remaining completely secure and incorruptible. The records, called ‘Private Placements’ represent a funding round of securities sold through a private offering. They have traditionally been stored in paper form, making them inefficient for clients to access and view.
“Our clients want real-time visibility of their private placement transactions so that they know when they will receive the coupon on a private debt transaction or to facilitate an audit of transaction records,” said HSBC’s CIO of Securities Services, Stephen Bayly.
The move is part of plans announced by HSBC interim CEO Noel Quinn in October this year that involved remodeling business systems to mitigate significant Q3 losses. After a depressing quarter that saw a 24 percent decline in profits, Quinn has been faced with the possibility of having to cut 10,000 jobs.
Increasing blockchain interest
This year has seen an increasing interest in blockchain technology, particularly in light of improved performance from the cryptocurrency market. After shocking losses in 2018, Bitcoin and the majority of cryptocurrencies managed to make spectacular gains throughout Q2 and Q3 of 2019.
Earlier this year, the Bank of International Settlements (BIS) Chief Augustin Carstens indicated growing support for blockchain and cryptocurrencies after previously denouncing them. Speaking of the growing interest in the industry and the possible need for the creation of digital currencies for central banks, he said: “It might be that it’s sooner than we think that there is a market and we need to be able to provide central bank digital currencies.” Carstens had previously accused cryptocurrencies of being a “bubble, a Ponzi scheme, and an environmental disaster.”
After losing almost 30 percent in value during the month of November, Bitcoin (BTC) is up 17 percent this week and has almost doubled in value since the beginning of 2019.