Distributed ledger technology, in general terms, is a decentralised database managed by network participants, in which transactions are verified by participants without intervention from a central party.
On 29th November, HSBC announced plans to move some £20 billion of its total private placements from paper-based accounting to a blockchain-based system.
HSBC are hoping that in making this transition to the system known as Digital Vault, they can standardise record keeping and provide investors with real time access to their assets.
“With some of the yields that are on offer, we are definitely seeing an increase in demand,” said Ciaran Roddy, Head of Custody Innovation at HSBC. According to Roddy, interest in private placements from U.S. and British insurers, as well as Asian and Middle Eastern sovereign wealth funds, is on the rise.
However, whilst several financial institutions have invested billions into exploring use cases for DLT, most are yet to secure a widely used application for the technology.
Aside from forecast demand in private placements, which are expected to rise to US$7.7 trillion in 2020, up by 60% in 2017, reports suggest that a core catalyst are plans by Noel Quinn to reduce costs and improve returns in the coming year.
