Blockchain saving mutual funds US$2.6bn

Switching to blockchain infrastructure can save the mutual funds industry US$2.6 billion in back office costs, latest Calastone research shows.

The study, which surveyed 234 global mutual funds, measured the economic impact of blockchain and automation.

Improved processing time; the reduction in the number of manual errors and quicker resolution time; and greater transparency and audit traceability were among the key advantages Calastone found.

The majority (71%) of respondents saw the costs of processing orders decline since moving to blockchain, leading to a 32% average reduction in costs.

Over 80% of firms agreed automation or using a third-party provider improved process efficiencies. Organisations in Australia strongly agreed with this statement.

Despite the advantages of using automation, about a quarter of firms continue to primarily use manual processing touchpoints such as the phone, fax, spreadsheets and email to process orders, the research said.

Investing in technology to support new infrastructure and to be able to connect to automated services were a concern for many firms and a worry for more than half (58%) of Australian respondents.

Since kicking off the first phase of its blockchain-enabled systems in June last year, Calastone said it has delivered more than US$641 million ($817m) in cost savings for its network.

In 2019, Calastone expects its core technology will fully migrate to blockchain.

Calastone chief executive Julien Hammerson said the analysis highlights how significantly the benefits can be accelerated when using blockchain technology to automate the entire lifecycle of mutual fund transaction - from order placement to settlement and payment.

"These results are testament to the impact technology can have on an industry at a global level. Though that is just the first step," he said.

Read more: BlockchainCalastoneMutual fundsInvestment managementJulien Hammerson
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