Another big player in the financial game, HSBC, has decided to explore the many possibilities that blockchain technology can bring. There are already many global companies, governments and financial institutions playing with blockchain-related concepts and HSBC is ready to join the ranks. Being one of the largest financial entities in the world, HSBC’s blockchain custodian approach may soon find a way to create waves unlike anything we have seen so far.
Unlike many other bigwigs in the financial game, HSBC is not going into their version of blockchain development light-footed. The London-based global financial powerhouse is planning to devote as much as $20 billion in assets to get their project started. Either they know exactly what they are doing, or they are talking a very expensive gamble. Of course, we’re betting that it’s the prior.
Is $20 Billion Enough?
To put things in perspective, HSBC is putting nearly half of its holdings and assets into the new blockchain custodian platform. HSBC is currently holding more than $50 billion in assets. Considering that they are ‘experimenting’ with such a large percentage of their overall holdings, one would think that the bank knows what they are getting themselves into. Assuming the move with the $20 billion in assets goes smoothly, we would not be surprised to see the rest being shifted over as well.
The Blockchain Custodian
Holding the $20 billion in assets will be the blockchain custody called Digital Vault. By mid-March, HSBC hopes to have moved the entire allotment of $20 billion in assets to the custodian.
The move is an interesting opportunity for HSBC as the blockchain network will allow for files and accounts based on paper records to become completely digitized. Not only will digitizing financial customer accounts make doing business faster and more convenient but it will also create opportunities for HSBC to standardize their practices much more efficiently than ever before. Account digitization, alone, may lead to many new developments in it own right, but we’ll have to see how it goes over the next year or so.
At the moment, it is clear that real-time access will make many aspects of the bank-investor relations much better. Investors will be more informed and will be allowed to act on their financial decisions more effectively, and banking professionals will be able to access customer accounts from every corner of the world.
Benefits of a Blockchain-Enabled Asset Custodian
Of the many benefits that a blockchain-enabled asset custodian can bring to investors, round the clock access to securities that are continually updated in real time is one of the most attractive aspects. Having assets accessible through blockchain also means fewer middlemen, which translates to transactions being faster, more transparent, and less expensive at the same time.
Might HSBC be the One?
The move by HSBC to digitize assets is not a new concept in the banking world, but they might be the ones to pull it off. Not only does HSBC have the money to invest in the development of such a far-reaching program but their pre-existing global infrastructure and massive client base might be exactly what they need to tip the scales in their favor.