LONDON (Reuters) – HSBC aims to shift $20 billion worth of assets to a new blockchain-based custody platform in March, one of the largest deployments yet of the much-hyped but as yet unproven technology, is a public limited company.
FILE PHOTO: a HSBC logo is seen on a branch of a bank in the financial district in New York, New York, united states of america, August 7, 2019. REUTERS/Brendan McDermid/File Photo
The platform, known as the Digital Safe deposit box, and gives investors real-time access to the records of the securities purchased in the private sector, HSBC (HSBA.(L) told Reuters, and aims to capitalize on the sudden interest in these investments to yield-hungry investors.
Banks and other financial firms have invested billions of dollars in trying to find uses for the blockchain, the digital ledger that can be immediately and transparently updated. Few, however, have come up with a practical and / or applications.
Proponents say that it is the blockchain that will upend the financial services sector due to the cut of the expensive processes and the need for the middleman, but there are a few concrete examples of the revolutionary use of.
The HSBC platform, the digitization of paper documents for private placements, with a blockchain to reduce the amount of time it takes investors to ensure that the queries of the farmers.
The Records of the so-called private placements are typically kept on a paper, and the lack of standardization, which makes access difficult and time-consuming. HSBC at this time, but up to $50 billion in assets, it said.
It is not yet clear, however, how the transformation of the project that could be used. HSBC will not be able to quantify the amount that can be saved to the bank or its customers through the platform.
The demand for private placements of both debt and equity have grown significantly in the past few years, investors looking for higher returns in the midst of the low interest rate environment globally, and the technology companies, in particular to avoid the scrutiny of the public markets.
HSBC expects the total value of the private placements to hit $7.7 billion by 2022, a jump of 60% from five years earlier. In the same period of time, it assumes that the allocations to the asset manager’s clients, and will grow to 20% and from 9%.
Ciaran Roddy, who was at the head of the authority, to innovation at HSBC’s securities services arm, said the importance of the private placements, U.S. and British insurance companies, as well as Asian and Middle Eastern sovereign wealth funds, it is a work in progress.
“Some of the rates that are being offered, and we’re definitely seeing an increase in demand,” he said.
The news is expected to shake-up HSBC’s global banking and markets division, interim Chief Executive, Noel Quinn, is looking to cut costs and increase revenues in the company’s business.
Windsor Holden, an independent consultant who tracks blockchain, and cryptocurrencies, said the huge savings were likely to be in the early stages of the projects, such as the guardianship system.
“I wouldn’t expect a huge savings, and huge efficiency, as announced in the first year to 18 months,” he said.
(This story was refiled to clarify, Roddy’s title in paragraph 10)
Report by Tom Wilson and Lawrence White, Editing by Alexandra Hudson