FinTech firm FNZ has onboarded some of Europe’s largest asset managers onto its blockchain-based fund administration platform, as it looks to challenge incumbents with the new technology.
The fund managers signed up to the platform launched by UK-based FNZ include Legg Mason, Aberdeen Standard Life, Kames Capital, Equity Trustees Fund Services and Merian Global Investors.
The solution, FNZ ChainLink, leverages blockchain technology to replace the thousands of copies of transaction data and holdings with a single source of truth accessible by all parties.
“The global fund industry today relies on a plethora of peer-to-peer connections between investors, managers, and platforms to effect basic fund activities such as trading, settlement, transfers, distributions and reconciliation,” said Phil Goffin, head of innovation at FNZ.
“None of these transactions are synchronised in real-time. Everyone has a different view of ‘the truth’ that often persists for days and months, leading to errors and expectations, high back-office costs and risk for all participants.”
The FNZ ChainLink creates the main legal register for the fund and all associated transactions directly on the blockchain, making it simultaneously accessible to platforms, managers, transfer agents, fund accountants and custodians.
It also eliminates the efforts of reconciliation, enables real-time delivery vs payment (DvP) settlement of trades and real-time fund transfers.
“We are working with a number of transfer agents, asset managers and platforms that aren’t FNZ-powered to ensure the benefits are shared by the whole industry,” added Goffin.
A number of custodians and asset servicing providers have trialled using blockchain platforms to process fund transactions. However, independent start-ups that are specialising in the use of this technology such as FundsDLT a blockchain-based decentralised platform for fund processing, are leading the way and could potential overhaul traditional fund administrators.
Banks such as BNP Paribas Securities Services and Credit Suisse have conduced fund transaction tests on the FundsDLT platform with their own asset management businesses.
Meanwhile, Societe Generale Securities Services (SGSS) also ran a trial fund transaction on the IZNES platform last year using blockchain technology developed by SETL.