Blockchain can be the real deal for asset managers, experts claim

Blockchain can be the real deal for asset managers, experts claim

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Analysts at JP Morgan and Oliver Wyman reckon distributed ledger technology – popularly known as blockchain - can help asset managers tackle some of the key challenges they face today.

A recent report by experts at both firms suggests that managing data, providing solutions, not just products; and providing service value to clients in a changing competitive landscape can all be improved.

“Blockchain-related interest and investment have reached critical mass, and the technology has shown itself to be capable of driving major change,” said the study, co-authored by Samir Shah, a managing director within JP Morgan’s corporate & investment bank.

“By enforcing convergence on common data standards and eliminating the need for a central authority to hold a “golden record,” we can reduce reconciliation and facilitate seamless transfer of digital assets.”

The paper goes onto that that asset managers can achieve material cost benefits across front-, middle- and back-office activities through a reduction in data manipulation, the decommissioning of legacy infrastructure and lower frictional costs of investment.

“Revenue opportunities will grow out of the improved data sources, greater liquidity and lower frictional costs fostered by blockchain,” added Chris Allchin, partner, corporate & institutional banking at Oliver Wyman.

“Asset managers will be able to serve clients in new ways, for example, with real-time reporting or alternate trading strategies.

“Ultimately, end investors may be the greatest beneficiaries, as asset managers and other providers compete by offering improved propositions and passing on savings.”

JP Morgan and Oliver Wyman executives also predict four successive waves of deployment for blockchain technology.

Initially, they expect the first two waves (2016-19 and 2020-30) to be focused on sharing and using data.

An expansion to critical infrastructure should follow (2017-2035) once confidence in distributed ledger technology grows.

The final wave, in which a truly decentralized financial ecosystem arises, is perhaps the most ambitious and the most uncertain.

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