The USD20 billion leap of faith to blockchain
According to Reuters, the world’s local bank, HSBC, aims to shift USD20 billion worth of digital assets, from paper to a blockchain-based platform by March 2020.
Via this platform, being branded as Digital Vault, will give investors real-time access to records of securities bought on private markets.
Forbes reported the amount, as 40-percent of the total assets HSBC currently looks after. Forbes also called it “a big leap of faith” for HSBC to do this on a relatively untested technology like blockchain.
Currently, the most obvious advantage of HSBC’s Digital Vault, is the reduction in time for investors to check or query on their holdings.
Removal of costly processes and middlemen fees, as well as transparency of transactions, are the other benefits that a blockchain platform is reported to be able to offer.
Reuters reports that the bank expects the global value of private placements to hit USD7.7 trillion by 2022, a jump of 60-percent from five years earlier. Over the same period, it thinks allocations by asset manager clients will grow to 20-percent from 9-percent.
Perhaps, it was simply time for a massive technology upgrade. But why blockchain technology?
Well, this isn’t the bank’s first rodeo with blockchain.
Throughout 2018 and 2019, HSBC has been “testing” the use of blockchain technology for live trade finance, on at least three separate occasions.
Perhaps these events have been the proof HSBC needed that blockchain is robust and scalable enough to “store” large and complex transactions, and enable quick and convenient retrieval of information.
This is what the blockchain-powered Digital Vault seems to be able to offer the private investor community, for now.