Last year, HSBC settled $250 billion (£194.15 billion) worth of forex trades using blockchain. It’s obvious that the distributed ledger technology (DLT) is gaining more traction in a sector hesitant to embrace it.
In a recent statement, the bank has settled over three million forex trades and made over 150,000 payments since February using blockchain. However, HSBC claims that that forex blockchain represents only a tiny proportion and is not willing to give data on forex trades settled through traditional processes.
Still, the data marks a significant milestone in the use of blockchain by mainstream finance, which until now had been very hesitant to start using the technology at any scale.
The use of blockchain as a shared database helps in the processing and settling of transactions in a matter of minutes. In addition, the absence of third-parties/middleman for checks, the impossibility of changes, and the high security make the blockchain technology the prime candidate to ameliorate the financial sector. Until now, banks and other financial firms have invested hundreds of millions of dollars in the technology with the hope to simplify and slash costs in processes from settlements to payments.
However, few banks have moved from testings to the real implementation of blockchain in large-scale projects. Many are worried about high costs and especially the uncertainty over regulations and the risk of a negative impact on existing systems.
On the other hand, HSBC confirmed that its blockchain technology has automated manual processes and reduced its reliance on external technology. Moreover, this new implementation has helped in lowering the risks of errors and delays, as well as cutting costs and even optimizing its balance sheet.
“HSBC . . . conduct[s] thousands of foreign exchange transactions within the bank, across multiple balance sheets, in dozens of countries,” said the global head of currencies at HSBC, Richard Bibbey. “FX Everywhere uses distributed ledger technology to drastically increase the efficiency of these internal flows.”