An investment funds transaction network, Calastone, issued a statement on 3rd December announcing its plans to shift its operation to blockchain in May 2019. The move is focused on reducing operating costs by billions of dollar per year.
The UK-based company offers back and middle-office services to 1,700 plus firms like Invesco, Schroders (SHNWF), and JP Morgan Asset Management (JPM). Calastone help firms sell off their funds across the globe via banks and other domestic financial consulting firms.
The shift would see a transaction of more than 9 million messages in a month which would be worth more than $217 billion when completed on the blockchain. The shift will also coincide with the most recent trend of companies moving to the digital ledger technology.
As of now, three separate messages are sent across firms buying into a fund – for placing the order, confirm receipt, and confirm the cost. Blockchain is being perceived as a reliable mode of communication as compared to the traditional mode of communication such as faxes that are still being used by certain industries. The traditional modes of communication are time-consuming as compared to blockchain technology. Shifting to blockchain will help the company save around $4.3 billion a year in global fund industry costs by encouraging trade and settlement processes, as informed by Calastone referring to a research by consultants Deloitte.
The amount thus saved would be huge for the company as it is being pinned by investors for lowering its fees which is its main source of revenue. The investors are also pushing the company to raise its costs linked to regulations after the financial crisis.
Appreciating blockchain technologies, Andrew Tomlinson, the chief marketing officer at Calastone said that more we automate, the more are the chances of de-risk and streamline tasks with high speed.
Blockchain was introduced primarily to support cryptocurrency Bitcoin today the technology is being perceived by industries as a way to share information and database as well settle deals in a fraction of minutes. Blockchains does away with the middlemen for corresponding or confirming deals. It is, in fact, a decentralized mode of carrying out transactions.
The supporters of blockchain technology believe the technology has the capability to revolutionize the industries ranging from finance to shipping by enhancing the efficiency of office jobs. The technology, in fact, has been tested and tried by various financial institutions and firms across the world in just a few years of its introduction.
There has been a lot of hype for blockchain technology which has pushed both private and publicly trader blockchain companies to try out the technology on a test and trial mode before its full adoption. Companies and certain regulatory bodies are looking forward to different ways the technology can be best utilized without infringing the central regulations of industries. Despite big promises, there are also a number of concerns related to the technology that has pushed financial companies and asset managers to reconsider its adoption. For instance, the security of data is still a matter of concern for some. Time will tell the true direction of blockchain technology adoption.
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