Blockchain or distributed ledger technology is the underlying and fundamental technology that has enabled the transition from an information exchange network to a value exchange network. It is the key basis on which crypto assets were developed. Blockchain is now applied in the finance, retail, manufacturing and wealth management industry. With contempt for blockchain being seen as a disruptive force, it is yet having a transformative effect on different industries, especially the wealth management industry.
Adoption of blockchain by wealth management services
Now is the time for the wealth management industry to embrace blockchain technology! The adoption of new technologies is happening at a rapid pace as the wealth management industry still operates on business models based on decades old technologies. In addition, wealth management clients increasingly recognize the significant opportunities offered by these digital assets. When wealth management companies choose not to offer their clients a glimpse of new technologies, it is not the smartest decision! Wealth managers need to carefully monitor what these technologies offer: how can they offer new investment and diversification opportunities to clients, because once these technologies become mainstream it might become difficult to try to catch up!
Today, customers are increasingly curious and intrigued by digital assets and want to embrace this new technology for broader purposes, from improving interbank transactions to regular reporting. Reducing transaction times and costs, ensuring a successful and smooth integration for clients, offering new investment and diversification opportunities to their clients, all of this can be addressed when asset managers consider implementing these new technologies. Unlocking liquidity in traditionally illiquid markers offers great opportunities and allows for efficient investments at different levels.
Easier and smoother blockchain transactions
Blockchain technology that focuses on decentralization, consensus, fast and cheaper transactions can make all transactions easier and smoother, and renew existing business models. When wealth managers introduce Blockchain technology to their clients, various services and processes can be improved. For example, customer onboarding is seen as a challenge in financial services because its process takes time and is often prone to errors. Moreover, when it comes to this process, any delay can have a drastic and costly impact in a highly competitive market environment. With blockchains, this process could be easily tackled. Blockchain technology ensures that this onboarding process can be streamlined with easier KYC, this technology brings a whole range of use cases designed for real-time settlement, money and value exchange, ensuring the data privacy, and this technology uses more secure and tamper-proof smart contracts.
The use of blockchain technology is not only limited to make the integration process easier and more efficient, however, this technology also focuses on different transactions. It stores every transaction that occurs in the nodes, drastically eliminating the need for trusted intermediaries. With blockchain technology, transaction costs can be drastically reduced, while still having a large and positive impact. This technology guarantees a reduction in counterparty risks and a reduction in risk management costs. The wealth management industry can use blockchains to reduce transaction costs, save time and increase security.
Benefits of Blockchain Technology in Global Wealth Management
While blockchain technology is of great help in terms of reducing costs, increasing security, ensuring smooth and efficient processes and transactions, this technology is still being tested. More and more investors, wealth management companies, financial institutions and other institutions are interested in blockchain technology and how to implement and use it. Blockchain technology is developing in tremendous ways to the point of becoming a new ‘normal’. However, as it is under development, time will prove in terms of how this technology will be beneficial and useful.