The development marks Blockchain’s technology’s growing traction in the financial industry.
In a development that marks Blockchain’s growing traction in the asset management industry, HSBC stated it had settled forex trades worth $250 billion (£194.15 billion) using blockchain in 2018.
The development assumes significance since until now this sector had hesitations on embracing blockchain technology.
Since February 2018, HSBC has settled more than three million forex trades and processed over 150,000 payments using blockchain, it said in a statement. However, HSBC did not provide data on forex trades settled by traditional processes, saying only that those settled by blockchain represented a “small” proportion.
Nevertheless, the data marks a significant milestone for blockchain as it gains traction in the mainstream finance industry, which has so far been reluctant in using the technology at any scale.
Blockchain is a shared database that can process and settle transactions in minutes. It is the underlying technology that underpins the bitcoin cryptocurrency. Blockchain technology does not require third-parties for checks and its entries cannot be changed, thus making it highly secure.
Financial firms, including banks, have invested hundreds of millions of dollars in blockchain technology, hoping that it will further streamline, simplify and reduce processing cost of settlements and payments.
However, very few banks have moved from the testing phase to the implementation phase of blockchain in large-scale projects. Many banks and firms are worried about high costs, uncertainty over regulation and the risk of disruption to existing systems.
In its statement, HSBC said, blockchain technology has automated many of its manual processes and has reduced its reliance on external technology. Further, it has reduced the risks of delays, and errors and has helped it slash costs to better optimize its balance sheet.
According to Richard Bibbey, the bank’s acting head of forex and commodities, HSBC was looking at how Blockchain technology can help its multinational clients better manage forex flows.