FX trades amounting to a whopping $250 billion were reportedly settled by HSBC last year with the help of the blockchain technology, which is a milestone because the innovation was formerly unaccepted by the sector.
According to a statement by HSBC, more than three million forex trades have been settled by the bank, and additional 150,000 payments have been concluded by the bank since February through the use of the blockchain technology. HSBC refused to provide data on the number of forex trades that were resolved by traditional procedures, admitting that only a “small” proportion was settled by blockchain.
A Milestone for Blockchain Technology
Nevertheless, the obtained data shows that the blockchain technology is making progress as the mainstream finance is beginning to see its importance and make use of it which was unheard of in times past whereby the sector refused to use it at any scale.
Blockchain can be simply described as a shared database that enables the processing and settlement of transactions within very short periods. The technology was created to serve as a support for Bitcoin, and it does not need a third-party input. Also, once an entry has been made into it, the entry cannot be changed. All these and lots more have contributed to make the blockchain a very secure technology.
Blockchain: The Long Awaited Solution
A lot of money has been invested into the technology by banks as well as other financial institutions to the tune of hundreds of millions of dollars with the hope that it will make settlement and payment processes more simplified and more cost-efficient.
However, the few banks that were conducting tests on the blockchain decided to move onto implementing the technology in large-scale projects. This raised concerns among many about regulations, high costs and the possible disruption the technology would bring to existing systems.
The Blockchain Has Simplified HSBC’s Operations
HSBC boasts that with its blockchain technology, manual processes have become automated and its reliance on external technology has greatly reduced.
The blockchain has helped to make the problems of errors and delays that used to plague the bank negligible. In addition, the bank has been able to cut costs and optimize its balance sheets with the help of the blockchain, it said.
The acting head of forex and commodities of the bank, Richard Bibbey, through a statement, revealed that the bank was searching for more ways the technology could assist multinational clients to manage forex flows better.