Blockchain Embraced By Mutual Fund Operators

UK mutual fund operators Schroders Investment Management and Aberdeen Asset Management have set up a new program that will test blockchain in a trading environment.

The program includes five of the UK's largest fund houses and is expected to show the ledger-like technology bitcoin runs on could save billions for traders.

Blockchain In Finance

This is not the first time that the financial sector has taken an interest in blockchain. While bitcoin itself is often painted as an uncertain, volatile and often unsafe way to conduct transactions, many banks and financial institutions are positive on blockchain.

Several banks around the world have already begun testing to see whether blockchain will make communicating with one another regarding cross-border payments faster and more efficient. However, efforts to use blockchain for trading between mutual fund houses hadn't been explored until now.

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More Streamlined Process

If the project proves successful, it would allow asset managers to conduct trades without the need for third-party intermediaries like banks. That would reduce the time it takes to conduct such transactions significantly, while also cutting down on the cost to both the fund house and traders.

A blockchain-based system would accurately track how and when a security changed hands, making it a safer way to make trades with fewer possibilities for human error or tampering. Not only that, but the fund houses say that a blockchain system would also require fewer employees, cutting down on their overall operating costs as well.