How Blockchain Contributes to Wealth Management

How Blockchain Contributes to Wealth Management

By Capital Markets CIO Outlook | Tuesday, June 23, 2020

Blockchain offers an opportunity for businesses to gear up their wealth management efforts.

FREMONT, CA: Blockchain technology is increasingly disrupting industries. The financial landscape is particularly getting influenced by blockchain transformations. The financial services industry is heavily engaged in the adoption of blockchain technology to unravel the complete potential of transformative ledger technology. When it comes to wealth management, real-time settlement models could impact the execution of financial transactions with positive effects on counterparty risk, transaction costs, and capital availability. 

Blockchain incorporation would also facilitate faster client on-boarding and provider switching. Data privacy protection and investment profile propositions will also become cheaper and simpler with the aid of smart contracts. The above advantages would result in increased efficiency in terms of data exchange and would also propel more reliable client interactions. Digital investment portfolios based on cryptocurrencies could also address the essence of asset allocation as well as the need for diversification while providing alternative investment opportunities. Moreover, the latest autonomous financial instruments and automated investment vehicles developed on smart contracts can also replace conventional wealth management functions like client advisory and portfolio management. 

Tokenization is yet another way through which blockchain has enhanced its offerings in the financial world. For instance, major value investment like real estate, gold as well as fine art pieces is restricted by geographical region and wealth of individuals. Such limitations can be overcome by tokenizing a property. Thus the individuals with limited wealth will be able to invest in tokens a part of the property. Moreover, tokenization will also remove intermediaries like brokers from the picture. The investment profile will also benefit from diversification, which will occur as a probable consequence of tokenization. The fractional ownership will also enable the investors to disseminate risk across the diversely owned assets.

Wealth management is increasingly getting influenced by a number of varying factors in modern times. The introduction of blockchain will not only add transparency but also replace conventional wealth management functions.

Check out: Top Wealth Management Solution Companies

Weekly Brief