International banking giant, HSBC is the latest to be sucked into the blockchain vortex. HSBC revealed that it has made over three million forex trades in 2018 with about 150,000 payments via FX Everywhere, its proprietary blockchain. Richard Bibbey, the acting head of currencies at HSBC said the bank conducted thousands of foreign exchange transactions across multiple balance sheets and in dozens of countries. Bibbey said it was possible through blockchain. “The use of blockchain technology allowed the bank to automate many processes that were previously manual.” He said that it has also reduced their reliance on outside technology.
HSBC’s official statement highlighted that blockchain has transformed the bank’s processes. “It transforms the process around intra-company foreign exchange activity, automating several manual procedures and reducing reliance on external settlement networks.”
Blockchain Technology a Boon for the Banking Industry
Experts say the blockchain technology has come as a boon for the banking industry with the World Economic Forum describing it as the ‘heartbeat of the financial sector’. Through blockchain, the banking industry is able to achieve low costs of financial transactions. The fast-paced transaction and removal of payment gateways has resulted in low financial transaction costs. According to CBI Insights, the digital distributed ledgers have the potential to reduce operational costs. And it brings customers closer to real-time transactions between financial institutions. “Blockchain can create alternative and secure ways to borrow money and lower interest rates.” The report says that distributed ledger technology could disintermediate key services such as trade finance. “By replacing the cumbersome, paper-heavy bills of lading process in the trade finance industry, blockchain technology can create more transparency, security and trust among trade partners globally.”
It highlights cryptocurrencies, giving example of Bitcoin and Ethereum built on public blockchains. Any person can use it for money exchange. The report stresses that there is no need for third parties for verifying transactions. This gives people around the world access to cheaper and faster borderless payments.
However, many banks and institutions are still shying away from adopting the blockchain fully. They argue that the technology is still relatively new, which may be true, but aren’t all technologies undergoing innovation? But blockchain is being noticed and it brings ease.