First Santander, then Barclays and now HSBC.
HSBC Holdings are a UK based, international banking and financial services company. The roots of HSBC can be traced back to Hong Kong, where the bank first opened its doors back in 1865. Now, operating out of London, HSBC are a world known and renowned backing corporation. HSBC have an estimated revenue of around $51.445 Billion, as of 2017.
Today, CNBC report that a blockchain transaction has taken place between HSBC and agricultural firm, Cargill, which has been used to issue a letter of credit from the bank, involving a shipment of soy beans between Malaysia and Argentina. This letter was used to assure that Cargill would receive a due payment from the bank. It seems a bit benign however, historically for this letter to be issued traditionally, it would need to pass through numerous people and it would need to enter a long chain of communication, through digital forms and paper forms. Within the blockchain however, the letter can be stored, updated and read by anyone who needs it, on any computer on any network, assuming they know the location of it, of course.
This is yet another example of how blockchain might enter mainstream industries.
By doing this, HSBC are clearly displaying an interest in the blockchain field, otherwise, this experiment would never have taken place. By suggesting this is an industry they want to break into, HSBC enter the radar with rivals Santander and Barclays, for banks with an interest in the area. The beauty of this is that, the more banks that join up, the easier it will be for a mainstream blockchain adoption to take place within the banking sector.
According to CNBC:
“For this transaction, HSBC used a platform developed by blockchain start-up R3 called Corda. R3 works with a consortium of banks to come up with blockchain solutions to a variety of problems.”
Moreover, according to CNBC, Vivek Ramachandran, Head of Growth and Innovation at HSBC has said:
“The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous, the quick turnaround could mean unlocking liquidity for businesses.”
This is really good news for the blockchain industry and highlights another example of how powerful the technology is. We should expect to see much more of this coming from HSBC and to be honest, we may very well see more and more UK based banks getting involved in such activities. As it becomes more popular, perhaps the UK banking sector will see blockchain as the ‘cool’ new money.
Given that the Bank of England are currently part of a task force establishing cryptocurrency regulations for the UK, we could see some really important changes made because of this work by HSBC, Barclays and Santander.