8 Ways Blockchain can reshape the Alternative Asset Management Industry
Distributed Ledger Technology (DLT) can play a critical role in streamlining a highly fragmented, stagnant and cost inefficient $79 trillion global asset management industry. The current laborious practice of manual purchase and sale of funds is costing this industry heavily. According to Financial Times, if DLT were to be deployed even partially, it could reap savings in the range of $2.7 billion annually.
1-Operational Efficiency: DLT validates the data instantaneously across all nodes and automates this validation process. This is far more efficient than the centralized registry which has to undertake these validations manually.
2-Robust Tracking Tool: DLT in tandem with Artificial Intelligence (AI) can provide a robust tracking system for performance (risk volatility as well as returns) to the asset managers. This holistic analysis builds trust regarding the performance of the asset managers.
3-DLT provides data precision and integrity and overcomes the problem of GIGO (Garbage in and Garbage out). DLT provides an immutable record of a transaction which cannot be changed or altered on the public Blockchain.
4-Automation of Compliance Procedures: Using DLT, the compliance procedures can be automated which would greatly reduce the costs of operations, thereby reducing pressure on shrinking margins due to ever-increasing compliance costs.
5-Seamless Clients Onboarding: With DLT, onboarding of clients can become a seamless process, regardless of complexities of information or geographical distribution involved. DLT can extract and synthesize information seamlessly.
6-Clearance and Settlement of Trades: DLT can greatly simplify the task of clearance and settlement of trades instantaneously, which currently entails 2–3 days of settlement.
7-Liquidity and Capital Depth: DLT and its smooth operation facilitate connection of markets all across the globe. Overall the tokenization process increases market depth and liquidity.
8-Transparency: DLT helps to improve speed, right timed execution, audit (money trail) and transparency in the purchase-sale of assets.
Tariq Ali Asghar
