Blockchain technology is revolutionizing the asset management industry, particularly on the buy-side. According to a report by PwC, 77% of asset management firms expect to adopt blockchain technology by 2025.
Buy-side firms have started using blockchain to improve their investment processes, including:
creating accurate and efficient tracking system;
reducing the risk of errors and improving the speed of transactions;
improving compliance by creating a tamper-proof record of transactions;
enhancing transparency and security in the investment process;
One example of how blockchain technology is transforming the buy side is the use of distributed ledger technology (DLT) for post-trade processing. DLT can automate many of the manual processes involved in post-trade processing, such as settlement and clearing, reducing the need for intermediaries and increasing efficiency.
Furthermore, blockchain technology enables new business models and revenue streams in asset management. For example, tokenization allows illiquid assets, such as real estate and fine art, to be traded as digital tokens on blockchain-based platforms. This opens up new investment opportunities and democratizes access to asset classes that were previously only available to institutional investors.
As the DeFi market grows, it has the potential to transform the asset management industry by providing investors with a wider range of investment options, reducing the reliance on traditional financial institutions, and increasing transparency and security in the investment process. The integration of DeFi with traditional asset management could lead to a hybrid system that combines the benefits of both, providing investors with the best of both worlds.
