Blockchain was a popular theme throughout the conference with a number of experts acknowledging it could play a major role in revolutionising manual middle and back office process across financial institutions including banks and fund managers.
Ann Doherty, managing director at J.P. Morgan, said the bank was investing heavily into the technology citing it offered excellent cost dynamics, and could reduce duplication and replication in a number of paper driven processes.
Blockchain provides a database containing a golden source of data. Several panellists concurred it could help facilitate the Investment Book of Record (IBOR), a single source of truth at financial institutions. This would obviously have a number of regulatory and administrative benefits.
Blockchain has been adopted in a few asset classes and markets. Equity crowd-funding is one example. Some feel it could be used to assist clearing, settlement, speed up collateral management, and harmonise regulatory reporting. However, there are limitations. A lack of standards is probably the most significant, as is any absence of a common regulatory approach to monitoring Blockchain. Suspicion of Blockchain’s cyber-protections must also be quelled.
Several major fund managers are trying to determine how and where Blockchain can complement their businesses. Fifty-seven per-cent of asset managers and asset owners told a study by State Street that Blockchain would be adopted in the next five years. However, very few asset managers are using the technology although 42% told the State Street survey they were confident Blockchain would achieve the scale and size required to be successful.
One asset manager who did not want to be named was sceptical. He argued too many market participants were developing internal Blockchains and private Blockchains, often not in cohesion with each other. The State Street study found just 13% of asset managers felt Blockchain would be public. This could mean that achieving standardisation is a struggle.
Other market participants are expressing scepticism. Global Custodian reported earlier this week that Jeff Sprecher, chief executive officer at Intercontinental Exchange (ICE) told the International Derivatives Expo (IDX) Conference in London that he had reservations about Blockchain technology.