Calastone FinTech Investment Firm to Shift its Fund Network to Blockchain for Reducing Costs


The investment fund transaction network called Calastone will be shifting its system to blockchain in a few months. The decision was taken in order to slash costs for the sector. According to the report released by Reuters, the move could save billions of dollars a year.

The company is located in London and it provides back and middle-office services to over 1,700 firms all over the world. Some of the companies that work with Calastone are JP Morgan Asset Management, Schroders and Invesco.

It will be possible for these companies to transfer more than 9 million messages per month that are worth more than $217 billion. Everything will be completed through blockchain, allowing the technology to be used in the financial industry.

At the moment, it is possible for firms to sent three different and separate messages when they buy into a fund: one is used to place orders, the second is to confirm receipt and a third to confirm the price. Although it is more reliable than other methods such as faxes, the process is still time-consuming.

As mentioned by the report released by Reuters, it might be possible to slash $4.3 billion a year in global fund industry costs by pooling trading and settlement processes.

Andrew Tomlinson, chief marketing officer at Calastone, said that the more companies automate and re-risk, the more it is possible to streamline and speed up.

Blockchain has several times been accused of being a hyped technology that grew because virtual currencies were growing in the market. However, it provides interested users and companies with the possibility to process and settle transactions in minutes without having to depend on a third party.

There are some proponents that believe that blockchain technology can revolutionise several industries such as finance, shipping and health. Jobs can become much more efficient. Although there has been a lot of hype around distributed ledger technology (DLT) just a few projects started to embrace in the financial sector.

Banks and asset managers are also concerned about blockchain security and how it works.

Matthias Huebner from the consulting firm Oliver Wyman commented about this technology:

“How secure is the technology? Is there a risk of fraud? Is there a risk of data just getting lost?”

There are already some use cases for blockchain technology in the supply chain industry. Different companies and retailers are already using DLT for clients to know where the products they buy come from and how they have been handled before.

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