Blockchain technology for investment management firms


Blockchain technology for investment management firms

Advancing asset management technology

Blockchain and asset management

Investment management (IM) leaders have responsibilities beyond managing the issues of the day—they should also position their firms for the future. Blockchain is one new technology that should demand IM leadership attention for two reasons. First, this technology has the potential to transform and extend asset management business value chains. Secondly, it is in early stages of development, signaling opportunity.

Imagine a world where customers carried a trusted digital identity that is linked to their financial records and transaction history. Their digital approval of a new account registration triggers a smart contract. The technology then executes a records search and returns an authorization to open (or not) the kind of account proposed by the financial institution. Upon completion of the eligibility review, digital account opening documentation is securely presented to the new customer on a personal smartphone app. The time, location, and electronic signature characteristics for each component of the new financial relationship are captured and secured. The app then secures the funding of the new financial relationship through an automated payment system, or an automated securities transfer. This approach equally applies to the private equity fund administration where blockchain and smart contracts can manage raising and calling capital, thereby tightening the process and removing some of the risk. Smart contracts and blockchain technology have the potential to provide a selectively automated process, with a person-in-the-loop as applicable or desired.

Six-step guide to getting started with blockchain technology

While the hype around this revolutionary technology is strong, asset management firms considering it for their business processes can take a deliberate path to getting started. With this path, they can select a transformative implementation while mitigating the risks.

Six key steps, if performed effectively, can take a firm into blockchain:

  1. Inspiration
  2. Education
  3. Ideation
  4. Collaboration
  5. Prototyping
  6. Implementation

To see the detailed six-step process, download the PDF.

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