Multinational investment bank HSBC and financial services company Wells Fargo are the most recent institutions to utilise blockchain technology. Being two of the largest financial institutions of the world, HSBC and Wells Fargo are now settling their foreign currency trades using blockchain.
The Distributed Ledger Technology (DLT) infrastructure allows the two financial titans to increase settlement speed, safety and efficiency. Head of FC Partnerships and Propositions at HSBC, Mark Williamson, told City A.M that the future of finance lies in blockchain and DLT:
“As we start to move towards Web 3.0, which is the movement of store of value and payments onto distributed ledger technology and blockchain solutions, then having that underlying backbone and rail is going to be even more important”
By using blockchain technology, HSBC and Wells Fargo can collaboratively settle foreign exchange trades multiple times a day with settlement being quicker than with traditional technology.
This development will allow the two financial giants to avoid third-party banks, such as CLS, widely used in the finance sector for settling foreign exchange trades. Settlement and exposure risks are vastly limited with blockchain and DLT services due to settlement time taking less than three minutes.
Combined, the two companies control over USD$4.8 trillion worth of assets making them two of the largest financial institutions using blockchain and DLT services.
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