This paper is the second of a series on the future of the asset management industry and the key role we see blockchain playing in its evolution. Our first paper, ‘An Executive’s Guide to the Future of Asset Management - Part 1 - Transforming Asset Servicing’, focused on the engine room of the European funds industry, the little-praised but crucial back and middle office functions which make up the asset servicing sector. The paper provided a taste of the role which blockchain is currently playing and will play in the asset servicing industry by showcasing use cases across all of the key areas of (i) the Custodian Bank, (ii) the Fund Administrator and (iii) the Transfer Agent and Reporting, while also briefly covering the impact on the asset manager.
We now switch our focus to the role that blockchain will play for the asset manager, which impacts a range of front and middle office activities. This paper provides an overview of:
1. Opportunities for the evolving role of the asset manager
2. Challenges for the asset management industry
3. Trends developing in the asset management industry
The paper then examines a variety of areas within the asset management function which shows the transformative effect blockchain can have, and is having, on the industry:
1. Portfolio management is changing with new processes for issuing and trading securities such as equity and debt securities
2. Immediate and more streamlined issuance and management of fund shares
3. Disintermediation of multiple parties through the development of direct asset manager to
4. T+0 settlement becoming a reality
Real life examples of early innovators in these areas are highlighted throughout the paper in order to demonstrate that the era of ‘hype’ is rapidly coming to an end, as we see blockchain being utilized by some of the largest global asset managers today.