Blockchain and the impact on fund distribution

Blockchain technology has the potential to severely disrupt the fund distribution and administration market.

Executive summary

Extending far beyond bitcoin and cryptocurrencies, blockchain technology is bringing disintermediation to merely all industries. A survey from the World Economic Forum1 highlights that financial services will be transformed by this technology with expectations of at least 10% of the global GDP being stored on blockchain platforms by 2025. The fund sector that is seeking levers for processing optimisation and that relies a lot on financial service intermediaries such as transfer agents, fund registries, and fund administrations will be particularly impacted.

So blockchain, a fairy tale or an inevitable change?

A blockchain relies on a digital and distributed ledger, which performs in a transparent environment without the need for a trusted authority to validate transactions. Rather, there are computer nodes that follow some consensuses and protocols to operate the ledger in an automated way. A blockchain is also able to execute so-called Smart Contracts application, self-executable computer programs that perform yet simple logic but can be assembled to produce sophisticated applications.

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