HSBC extends digital yuan services for corporate clients, eyes new use cases

HSBC Bank (China) (NASDAQ: HSBC) has announced an expansion of its suite of digital yuan services to corporate clients ahead of the formal launch of the central bank digital currency (CBDC).

According to an official statement by the Chinese arm of the global bank, corporate entities can link their bank accounts with existing or new digital yuan accounts to manage their funds. The integration will allow corporate clients to seamlessly deposit digital yuan into their bank accounts without the hassle of switching between multiple applications.

Zeng Su, Managing Director of HSBC China’s Global Payment Solutions Department, disclosed that the bank has been moving toward expanding its array of digital yuan services to corporate clients since the last quarter of 2023. The bank’s latest efforts are geared toward supporting the People’s Bank of China (PBoC) pilot studies, testing the ecosystem for a commercial rollout.

“As one of the major foreign banks in China, HSBC is leveraging its rich experience in payment settlements, actively exploring technological innovations, and business model planning to participate in promoting China’s digital financial development and empowering the digital economy,” said Su.

Apart from linking accounts, corporate clients will be able to bind their cards with the digital yuan mobile app. There is speculation that HSBC may provide corporate account holders access to offline payment functionalities akin to the services rendered to retail customers.

In 2023, HSBC (China) tested the waters by offering CBDC services for retail clients to support adoption rates, racking up promising results along the way. At the time, HSBC joined an exclusive list of financial institutions, including Hang Seng Bank (NASDAQ: HSNGF), Fubon and Standard Chartered (NASDAQ: SCBFF) to provide CBDC services for individual customers.

With the latest play, HSBC has surged ahead to become the only player with digital yuan offerings for corporate clients, but early reports indicate that several banks are angling to achieve the same feat.

Not content with binding cards and linking accounts, HSBC (China) is hinting at providing corporate accounts with a range of use cases revolving around CBDC cross-border transactions.

“We look forward to providing related support to our customers in broader areas such as cross-border merchant payments and cross-border trade settlements in the future,” added Su.

Inching toward a commercial launch

After over four years of studies, it appears that the PBoC may be nearing a commercial rollout in the coming months following a name change of the digital yuan app on app stores in China.

At the start of June, users spotted the dropping of the “pilot” tag from the terminology, fueling fierce speculation of a mainstream launch. However, local authorities played down the name change as merely complying with local registration requirements.

“Therefore, the removal of ‘pilot version’ from the name of the digital renminbi app this time will not change the existing digital renminbi pilot policy,” said one local administrator.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: CBDCs are more than just digital money