Final Tech Report HD - Flipbook - Page 19
There is complexity all over the industry; across all the different
parties involved in one single investor transaction when it
comes to independent financial advisors, individual investors,
third-party distributors, fund platforms, institutional investors,
their service providers, and the whole value chain of the fund
investment process. People on the front office side in the major
markets, such as London, are dealing with these headaches
every day, directly and indirectly. There are 100 or more bigname asset managers in London and at least 25 or 30 of them
have a senior-level executive who has already realised that the
future of financial market infrastructure is based on distributed
ledger technology. Many of them are aware that the
application of distributed ledger technology to the funds'
industry has already begun. It's happening in small pockets, in
small circles, but it’s happening.
These leaders know the difference between the bitcoin
blockchain and multi-party consensus mechanisms, or
‘blockchain-inspired’ financial market utilities. They’ve realised
that the world’s single largest use of blockchain technology is
not actually applicable to capital markets, but know that
innovators are already bringing variations of it to market.
They are now asking, "How can I trust that you can see what I
can see and vice versa? How can I stop reconciling to everyone
else, because we all have the same distributed record, without
everyone knowing my business? Having that trust, that
knowledge, and that transparency is a big deal. That is where
things are headed in the financial markets.
The number one area due for transformation is in investor
recordkeeping, as there are so many duplicative functions
across the industry. The originating investor has a record, their
advisor has a record, a third-party distributor has a record, a
fund platform has a record, all from one transaction. Then, the
transfer agent has a record as well, if not multiple records. With
institutional investors, add a front office and all of their service
providers to the list of recordkeepers. That's at least five copies
of the same transaction, the same holding, but it can all be
mutualized as one record, and then distributed securely.
This duplication keeps people in jobs, but with where we’re
headed, those roles will no longer be necessary.
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