HSBC used blockchain to settle forex transactions worth $250b
DAILY foreign exchange (forex) trade transactions total about US$3 trillion, but no significant part of it has been performed using blockchains. Until now.
According to Reuters, HSBC has recently announced that it settled US$250 billion worth of forex trades using blockchain in the last year.
A statement issued by HSBC revealed that the bank has settled over three million forex trades and made over 150,000 payments since February using blockchain — although the bank refused to share data on forex trades settled by traditional processes.
Nevertheless, for a bank of HSBC’s stature, disclosing its use of blockchain says a lot — not just about the bank’s capabilities, but also about the progress that the technology is making in the financial services industry.
Although banks such as Standard Chartered Bank, Bank of America, DBS Bank, ANZ Bank, and many others have launched blockchain projects and initiatives in the past, nobody has gone on record with the actual volume of business that the blockchain solution has handled.
However, there’s a clear trend in the financial services space where banking and insurance companies are collaborating with fintech companies, solutions providers, and technology consultants, to accelerate their journey to blockchain-ready solutions.
It’s interesting to note that the announcement is aligned with Gartner’s prediction in its Hype Cycle for Blockchain Technologies 2018 study.
Gartner Research Director and Blockchain Subject Matter Expert Adrian Leow who spoke to Tech Wire Asia in September pointed out that the financial services industry will be the first to use blockchain at scale, leading others such as retail and manufacturing into the fold.
HSBC also revealed that it used blockchain technology to automate manual processes and reduce its reliance on external technologies. In fact, blockchain has allowed the bank to lower the risks of errors and delays, cut costs, and better optimise its balance sheet.
The bank is also keen on exploring how blockchains can help multinational clients better manage forex flows — Acting Head of Forex and Commodities Richard Bibbey told Reuters.
In the future, experts hope more banks follow in HSBC’s footsteps and get more candid about the results of their blockchain projects.
Axis Bank in India, for example, launched an international payment service for retail and corporate customers dealing with RAKBANK in the UAE and Standard Chartered Bank in Singapore back in 2017. Details on its progress, however, are still awaited.
CIMB too, in Malaysia, entered into a strategic collaboration last year to get started with blockchains in the cross-border payments space, as has the National Commercial Bank (NCB) of Saudi Arabia.
The fact is, most regulators have a positive opinion when it comes to blockchain, especially in the APAC.
As a result, in light of HSBC’s annoucement, experts hope that more banks will start offerring services (and information) to the public on their blockchain based platforms — reducing costs and saving time.