HSBC Reveal Distributed Ledger Technology for $250bn Worth of Transactions

One of the largest banks in the world has revealed that it has used blockchain for more than $250 billion worth of transactions.

HSBC, whose international network comprises around 7500 offices in over 80 countries and is one of the four major clearing banks in the UK announced its use of distributed ledger technology on Monday [14th January] causing shockwaves in other financial institutions.

In a press statement, the bank said it settled more than three million foreign exchange (FX) transactions and made a further 150,000 payments using its HSBC FX Everywhere platform which it said it has been using for the last year “to orchestrate payments across HSBC’s internal balance sheets.”

The news comes in a latest of positive announcements for the technology, including a report by the World Trade Organisation which said blockchain could add $1 trillion to world trade by 2030.

HSBC said using a DLT platform had allowed it to verify that payments are settled without needing external confirmation

HSBC’s platform has resulted in “significant efficiencies and opportunities,” the release added, detailing benefits including:

  • Singularity, transparency and immutability. A shared, single version of the truth of intra-company trades, from execution through to settlement, which reduces risk of discrepancy and delay
  • Payments orchestration. Confirmation and settlement is automated by matching and netting transactions, which reduces costs and reliance on external settlement networks
  • Balance sheet optimisation. A consolidated, global view of forward cash flows, and certainty of funds throughout the funding cycle, supports greater balance sheet optimisation

The company’s interim global head of FX and commodities Richard Bibbey said using a DLT platform allowed the thousands of foreign exchange transactions conducted by the bank and its clients across different balance sheets and countries far more efficient.

“Following successful implementation inside the bank, we are now exploring how this technology could help multinational clients – who also have multiple treasury centres and cross-border supply chains – better manage foreign exchange flows within their organisations.”

Andrew Bird, CEO of GSM said the move “showed the real value that using distributed ledger technology can bring.

“HSBC have taken a huge leap forward with their shift to DLT and other banks will now be wondering how they can catch up.

“This method brings a combination of efficiency for the bank and its clients because it is faster and far less prone to error as there is only ‘one version of the truth’.

“This also means taking this dynamic approach reduces the chance of fraud, theft and other nefarious activities which sadly the banking sector have been burdened with in recent years.

“It was in light of the crisis of 2008 and, perhaps most well known, the government bail out of RBS, that new regulatory measures were put into place. Having this single version of the truth via DLT means the risk of regulatory breach is reduced.

“There are some blockchain nay-sayers around, notably in politics and the media, but this news shows that they are behind the curve on the opportunities that technology can bring; not only to big businesses but government departments and day to day transactions we all undertake.

“It also shows the absurdity of  some senior civil servants and politicians ignoring the opportunity of blockchain technology in solving its current thorny issues, such as the issue of the Northern Ireland ‘backstop’ in the Brexit withdrawal agreement or updated customs measures at UK ports.

“To me, the question is not if we want to use DLT but how long can we afford to keep waiting for companies and government to catch up?”