Blockchain can Save Asset Management Industry Billions Every Year

Digital solutions will go a long way in the financial industry. Right now, a lot of processes still require manual labor. It is cost-inefficient, cumbersome, and introduces unnecessary delays. The asset management sector can certainly benefit from the performance increase provided by blockchain technology.

Blockchain in the Financial Sector

It is evident distributed ledgers will play a big role in the future of finance. Not just in terms of banking or remittance either. Instead, new research indicates blockchain can revamp the asset management business as a whole. More specifically, the technology can automate buying and selling of funds, which will lead to major cost reductions. Giving investors more bang for their buck is always an option worth looking into.

Looking at the current daily trading volume across the busiest markets, total savings may add up to $2.7bn. That is a rather significant amount which should not be overlooked whatsoever. Using a distributed and decentralized market infrastructure will have many different benefits. Saving on costs is, perhaps, the biggest selling point in this regard.

However, the blockchain will also introduce additional transparency. It will also lead to new industry-wide standards to automate most of the financial entries recorded by different companies. As of right now, most of that information is still inputted on a manual basis. Staffers need to be paid to complete the tasks, which is both costly and time-consuming at the same time.

Transforming Asset Management Solutions

One thing most people don’t realize is how these added costs are paid by the end investor. That is a situation which needs to change sooner rather than later. A lot of money is “wasted” on manual labor which could easily be automated in this day and age. Whether or not blockchain is the best solution in this regard, remains difficult to predict.

Some trials have been conducted in this particular field already. Calastone’s trial in 2017 shows the technology can effectively process transactions a lot quicker. Moreover, it does so at a much lower cost compared to current traditional solutions. A test is not the same as using this technology in the real world, though. Processing millions of transactions every single day is a tall order, even for a distributed ledger.

Another problem in the asset management industry right now is the duplicate information. More specifically, the process of buying and selling funds is subject to duplication. This has been a problem for some time now, yet it seems things grow progressively worse. Something needs to change in the world of asset management in this regard. There is room for improvements and cutting costs at the same time.

It appears there will be more blockchain-based tests related to asset management this year. A lot of financial institutions show an interest in this technology. Calastone may effectively move their asset management services to a blockchain-based solution by 2019. Other players have some work to be done in this regard as well. Distributed ledgers continue to make inroads in the financial sector as of right now.