Serving the financial economy with its unprecedented banking services, the London-based HSBC bank is all set to make the first move in the fast-growing yet controversial technology arena of cryptocurrencies. The leading international banking giant has announced that it would shift assets worth $20 billion to a new revolutionary blockchain-pegged custody platform branded by the name of Digital Vault.
According to the official reports, the Digital Vaults platform will allow the investors to enjoy real-time access to the record data of the securities purchased on private markets. The global bank plans to earn lucrative profits by deploying on the new-age technology network and attracting more and more investors who aspire to earn hefty interest returns.
Since its inception into the financial world, blockchain technology and cryptocurrencies have been in the focus of the banking sector from around the world. These institutions have gambled billions of dollars to explore the possible developments and innovations in the decentralized space. However, the entities adopting applications for its practical use are still very few.
The supporters opine that blockchain technology adoption will help in a sharp reduction of costs in the banking ecosystem, though there are still no substantial proofs regarding the same.
HSBC’s newly launched solution will help in the digitized recording of paper-based private placements, via the excellence of blockchain technology. The digital records will facilitate the investors to scrutinize or track down their holdings at their convenience without any hassle. Private Placements’ records are made on paper and so lack standardization as access becomes time-consuming and complicated.
Interestingly, HSBC did not manage to quantify the amount that its Digital Vault project would be able to save for the institution or the clients. As the demand for private placements has been on a surge in recent times, HSBC opined that by 2022, the overall value of private placements in the global parlance would reach the mark of $7.7 trillion, accounting for a rise of 60% in the past five years span. It expects to witness a surge of 20% in the allocations by asset manager clients over the same period of time.
The chief of HSBC’s securities services division, Ciaran Roddy, said that the interest in private placements from insurers is growing at a fast pace in the UK, the USA, as well as in the Asian and Middle Eastern region. “With some of the yields that are on offer, we are definitely seeing an increase in demand,” said the spearhead.