HSBC announced they will be shifting $20 billion worth of assets to a new blockchain-based custody platform by March 2020. This is a vast improvement of the previous system as the HSBC platform will digitize paper-based records of private placements.
The platform, called ‘Digital Vault’, has been designed to digitize the current paper-based records detailing investor holdings and transaction histories.
The current system is time consuming and expensive, with multiple intermediaries required to process paperwork and oversee transactions.
Instead, records of private placement securities stored via Digital Vault will be accessible in real time, and investors can access their investment information in seconds.
Currently, the bank manages approximately $50 billion worth of the private placement assets, so it is taking a massive leap of faith by putting 40 percent of these onto the blockchain platform.
Private placements are typically held on paper and lack standardization which not only makes accessing them difficult and inefficient but also points towards an archaic and outdated system.
It is instances like this that show how important modernization of certain aspects of the banking and finance sector has become. The use of paper record-keeping for assets that amount to $50 billion is extremely beneficial. Banks and wealth managers are now starting to realize that the next step in this evolution is not taking what’s on offer, it is about setting a trend.
HSBC’s decision to put $20 billion worth of assets onto blockchain technology is being heralded as one of the biggest deployments to the transparent and instantly available technology — and we wholeheartedly agree.
Tokenization of Assets? Storing Docs in XDEX!
A necessary (and still missing) step in “tokenizing assets”, the concept of hashing and securing asset and investment documents on XDEX is an advancement in client portal access and engagement between the bank and their customers all by itself. This is precisely what we’ve been building, only doing it in such a way that small-to-medium enterprises can access this same level of technology for their customers without the millions of dollars necessary for R&D.
Talk to us about how we can help you launch a digital securities offering with XDEX.