Asset managers warned not to hesitate on blockchain

New research suggests asset managers may fall behind with blockchain developments
By Paul Walsh
Asset managers must take the initiative and embrace blockchain technology according to a new report from JP Morgan and Oliver Wyman.

The report suggests that the asset management community has historically taken a passive approach to technological changes that have left it having to make up ground in areas such as data analytics and machine learning.

According to the report, asset managers of varying setups have yet to engage in blockchain despite showing a willingness to learn more about the technology.

It also encourages asset managers to become involved in providing input to developers and regulators on blockchain implementation, direct external efforts towards blockchain use cases as well as identify early advantageous blockchain developments.

“While distributed ledger technology in its fully realised form could make it difficult for individual participants to gain long-term competitive advantages, we believe forward-thinking asset managers can differentiate themselves from peers by being at the vanguard of assessing and adopting new blockchain-based capabilities,” said the report.

Blockchain technology has been hailed by custodians as being the future of the industry with potential to streamline processes such as settlement, clearing and corporate actions.

A number of financial institutions – speaking at FundForum Berlin and NeMa Dubrovnik – have lauded Blockchain as a solution to many of the technological challenges faced by financial institutions.

It has also been questioned by regulatory bodies with US regulators warning that distributed ledger technology could pose “risks and uncertainties” to the financial stability of capital markets.