Banks have been among the most vocal opponents of the blockchain and cryptocurrency industries, despite the latter having only grown. “If you can’t beat them, join them,” as the saying goes, and that is exactly what banks have done.
Blockchain technology has shown to be particularly beneficial to the banking and payments industries, necessitating these industries’ need to change or be pushed out. Banks have begun to slowly but steadily embrace blockchain technology through various connections, recognizing its utility. Both large and small banks have used blockchain to improve their current processes.
Blockchain is being used by HSBC and Wells Fargo
On Monday, major banks HSBC and Wells Fargo announced plans to use blockchain to simplify interbank currency transfers. They intend to do so through HSBC’s FX Everywhere technology, established three years ago in 2018. Using blockchain technology, both institutions will settle multi-currency FX transactions.
Previously, HSBC used FX Everywhere for intrabank FX transactions within its banking system, but it is expanding this service to include other banks. Wells Fargo is the first bank to join this service, as HSBC expands its presence to include other banks in the ecosystem.
FX Everywhere employs real-time transparency and payment-enabled by the blockchain instead of payment (PvP) net settlement. This technique helps to save money by lowering transaction costs and reducing the settlement risks that are frequently connected with FX transactions.
HSBC has settled around $2.5 trillion in intrabank transactions thus far. The platform has been proven effective, and it is now being expanded to allow other institutions to reap its benefits.
Mark Williamson, Global Head of FX Partnerships & Propositions at HSBC, commented on the partnership:
“With the added option of prolonged settlement windows to optimize PvP risk reduction opportunities, the platform lets parties to easily settle bilateral cross-border obligations across several onshore and offshore currencies.”