The team of Security Token Consultants, which aims to “reinvent” finance with security tokens, reveals that the world’s top 100 banks in terms of asset under management (AUM) are learning to “reinvent” themselves with blockchain or distributed ledger technology (DLT).
The Security Token Advisors (STA) team writes in a blog post that the largest private banks in the world have been examining new Fintech solutions such as security tokens and blockchain or DLT in recent years.
The STA team notes that startups often provide the “source of innovation” for large companies, however, this hasn’t really stopped big banks from launching platforms that leverage the latest technology. According to STA research, 7 of the 10 largest banks in the world have publicly announced initiatives involving blockchain and / or security tokens.
As noted by the STA team, the China Construction Bank (with $ 3.6 trillion AUM) has been conducting research to develop solutions that use security tokens or blockchain technology in some way to improve existing operations.
As recently reported, China Construction Bank had announced they were partnering with Fusang However, in order to tokenize bonds worth $ 3 billion, the sale was canceled shortly before launch.
As confirmed by the STA team, the Bank of China may have been more prepared than the CCB because it introduced its own $ 2.8 billion tokenized bond earlier this year.
The Bank of China is reportedly using a blockchain-enabled solution to issue loans to SMEs so they can continue making contributions to the nation’s economy.
According to the STA team, no public statements from the Bank of China were found regarding the blockchain, however, there is an article about the institution’s projects that could involve DLT-based applications.
A reporter noted:
“According to statistics, as of the end of September 2019, China Banking and Insurance Trust has partnered with a number of insurance companies in the custody of electronic insurance policies, accumulating more than 4 million electronic insurance policies in custody and added more than 300,000 new housing per month since the beginning of this year. “
The STA team also noted that Japanese bank MUFG (with $ 2.9 trillion AUM) had announced in November 2019 the launch of its “ST Research Consortium” and its goal to create “next generation” financial transaction services. using blockchain or DLT. Prior to making this announcement, MUFG Bank had invested in Securitize, an established tokenization and issuing platform.
Last year, HSBC had also announced that it would liquidate $ 20 billion worth of assets with a blockchain-based custody platform by March 2020.
As confirmed by the STA team:
“HSBC’s platform, known as the Digital Vault, is set up to allow investors to access real-time records of securities purchased on private markets. While no clear updates have been released on this development, it is clear that the bank is preparing for the move to digital stocks and has been expecting an increase in demand for related services for over a year. “
The STA team also underlined this JPMorgan Chase, the largest US bank and the sixth in the world in terms of AUM, has announced the launch of a digital currency to support the instant transfer of payments between institutional clients.
The STA team noted:
“The multinational investment bank (JP Morgan) also reveals that the coins are sent over a blockchain network for the movement of money and for payment in securities transactions. Although the announcement describes the digital currency as a prototype, the bank itself is also the first US bank to successfully test a digital currency of its nature. More recently, JP Morgan struck a deal with blockchain firm ConsenSys to sell its Quorum blockchain platform. “
JP Morgan management states:
“We have always believed in the potential of blockchain technology and we support cryptocurrencies as long as they are properly controlled and regulated. As a globally regulated bank, we believe we have a unique opportunity to develop capacity responsibly under the supervision of our regulators. Ultimately, we believe JPM Coin can produce significant benefits for blockchain applications by reducing counterparty and customer settlement risk, decreasing capital requirements and enabling instant value transfer. “
(Note: For more details on blockchain-based security tokens and their applications introduced by major banks, check here.)