HSBC, one of the leading international banks in the world, is putting its trust in blockchain to track $20 Billion worth of private placements using a new blockchain-based custody platform. The new technology will replace paper-based records and the transition will be completed by March of next year. This deployment, dubbed ‘Digital Vault’, is one of the biggest of such a platform till date. If successful, it might encourage other megabanks and financial institutions to follow suit, which would be a big success for blockchain technology.
The bank is not completely new to such technology. It has been playing around with blockchain technology for more than a year. The bank used blockchain to make around 3 million foreign exchange transactions in January. That comes out to around $250 billion in trades.
Currently, the bank manages around $50 billion in private placements, so it is taking a huge leap of faith by placing 40% of it in the hands of an unproven technology. However, moving to blockchain comes with many benefits. Firstly, it will get rid of the hassle associated with paper-based records and will streamline operations in the records department of the organization. Furthermore, it will make these records much more accessible to both bank employees and investors. They can check up on their holdings within a matter of seconds, unlike the huge amounts of time and effort spent sifting through physical documents. The move will also save the bank some money in the long term, because maintaining a digital record is much cheaper than a paper-based one.