Payments made through this new HSBC service could take up less time and are less expensive when compared to traditional banking systems.
On Thursday, HSBC Holdings announced the launch of Hong Kong’s first-ever blockchain-based settlement service, spearheading fintech development in the city, enabling quick and secure payment mechanisms. Through this new service, using blockchain, a tokenised deposit program can convert traditional bank tokens into digital ones.
The South China Morning Post (SCMP) reported that Lewis Sun, the global head of domestic and emerging payments for global payments solutions at HSBC, explained that payments made through this service could take up less time and are less expensive when compared to traditional banking systems. The company said that companies can use this blockchain payment service to make real-time payments in Hong Kong and US currencies and transfer between HSBC Hong Kong wallets at any time of the day.
This new digital infrastructure is currently only available in Hong Kong, but the company is confident that these services will soon expand to other markets, across Asia and Europe by the end of this year. Sun added that when such tokenised payment systems are supported by regulated financial institutions, payments and cash management for companies can be made safer and more company-friendly.
The first company to use HSBC’s latest deposit tokenisation to complete an instant fund transfer was Ant International, an affiliate of Alibaba Group Holding. In a press release by Ant International, it was announced that this latest blockchain innovation was launched after a successful pilot test between HSBC and Ant’s own blockchain platform- Whale.
This Whale platform supports various tokenised assets from banks and financial institutions across the world, allowing interoperability of diverse blockchain networks. Ant International and HSBC have been engaged in a partnership since 2020 and even completed a successful HKD-denominated cross-bank experiment in 2024.
Ant also disclosed that it was after this pilot run that HSBC incorporated the learnings from this joint exercise into its tokenised deposit service. The general manager of platform tech at Ant International, Kelvin Li, described tokenisation as a ‘bridge between traditional banking and blockchain’, and through more public-private partnerships, Ant aims to make such tokenised systems more transparent, accessible and efficient for businesses worldwide.
This tokenised deposit service is also the first of its kind to be supported by the Hong Kong Monetary Authority’s (HKMA) Supervisory Incubator for Distributed Ledger Technology. The SCMP also reported that this live initiative is also the first bank among several other financial service providers to complete proof-of-concept use cases as mandated by the HKMA’s programme to enable tokenisation markets.
In August last year, the HKMA introduced a central bank digital currency testing mechanism that allowed HSBC and five other participants to experiment with tokenised money to support digital asset transactions. It brought Hong Kong a step closer to implementing interbank settlements using blockchain.
HSBC said that, as hoped, this latest transaction was initiated by Ant International through its global treasury management platform and offers clients liquidity management services which are more transparent, flexible and efficient. The bank said that initially, this tokenised deposit service will enable corporate clients in their treasury management to make real-time transfers of Hong Kong dollars and US dollars between corporate wallets owned by clients in Hong Kong.
The bank will use its network and technologies to develop suitable infrastructure, which will allow more digital transfers and settlement capabilities. Along with the proof-of-concept use cases, HSBC also intends to look into other use cases to support digital currency settlements and other instances of tokenisation.
Hong Kong is one of the leading financial powerhouses in the world. With breakthroughs in fintech, regulatory bodies are required to ensure safe and transparent transactions. This new collaboration between a big bank group like HSBC and a global digital payment services provider like Ant International will certainly open up newer avenues for blockchain to be implemented into financial services.
