Why should I join HSBC

HSBC saves a quarter of its foreign exchange costs - thanks to blockchain

The use of blockchain is paying off for the British banking giant HSBC. By using distributed ledger technologies in foreign exchange trading, the bank saved around a quarter of administrative costs last year.

Constantly fluctuating exchange rates, cross-border payment flows, a flood of transactions - foreign exchange trading is probably one of the most complex administrative processes in the day-to-day business of banks.

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Employees who feel this every day are the employees of the British banking giant HSBC, the largest international bank in Europe. Every day, London's foreign exchange transactions run into billions - and for the past year they have done so more efficiently and cheaply than the competition.

Because since February 2018, HSBC has been using blockchain technologies like no other bank to cope with the mammoth task of foreign exchange business: a step that, contrary to some skepticism, pays off.

The responsible manager, Mark Williamson, reported to the Reuters news agency that HSBC had made decisive savings through the use of technology. Thanks to blockchain technology, the bank has cut its administrative costs by a quarter since last year.

Use of blockchain saves costs

HSBC has been using the advantages of a decentralized commercial register on its "FX Everywhere" payment platform since February 2018. With the help of the software, up to 5,000 transactions are processed daily, a “significant” part of them through blockchain technology. In total, this corresponds to no less than 350 billion US dollars so far, according to the latest figures from the major bank from London.

Using distributed ledger technology, the platform enables Londoners to make automated transfers “across multiple balance sheets, in dozen of countries,” Richard Bibbey, head of the global markets department, told the British Financial Times in January about the software's advantages. With the help of the decentralized network, all the balance sheets of the banks involved in currency trading can be viewed and controlled in real time.

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A look at the past year now shows that this not only saves time, but also, above all, costs. Mark Williamson is certain that the development is trend-setting:

It is progressing rapidly. We can show that “FX Everywhere” is not just a one-time proof of concept or one or two trades [...]. That's running now

so the forecast of the manager to Reuters.

In the future, they want to push the platform even further and get more banks on board around the world.

The more participants join the joint network and thus the ecosystem with HSBC, the more efficient we become for our customers.

HSBC as a blockchain pioneer

HSBC has long been considered a pioneer in the use of blockchain in the banking sector. In addition to BBVA, BNP Paribas or Barclays, many of the traditional financial institutions, stock exchanges and funds are currently focusing their eyes firmly on the business opportunities offered by the new technologies. For example, JPMorgan Chase only announced this week that it would issue its own crypto currency. As an integral part of day-to-day business like at HSBC, however, the blockchain is far from being accepted by them.

The Londoners, on the other hand, do not stop and are steadily expanding their blockchain commitment. In addition to “FX Everywhere”, Europe's largest commercial bank is currently also involved in the development of the trading software eTrade Connect. The cooperation with ten other banks is intended to make interfaces in the financing of international flows of goods more effective in the future. In May 2018, in turn, HSBC succeeded in closing the first commercial trading transaction via the blockchain. The banking giant used the Corda DLT platform from the R3 consortium for this purpose.

With the success of "FX-Everywhere", blockchain enthusiasts will now feel confirmed. You might suspect that HSBC's enthusiasm for the new technologies is also paving the way for other major banks to use DLT.

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