Several major financial institutions based out of Europe have banded together to launch a blockchain-based investment platform.
In an announcement published earlier today, several top investment firms – including Credit Suisse Asset Management, Clearstream, Natixis Investment Managers, and Fundsquare (an affiliate of the Luxembourg Stock Exchange) – confirmed that they have successfully raised capital for “FundsDLT,” a new investment platform that will run on the blockchain.
Blockchain for More Effective Investments
As the announcement confirmed, FundsDLT is based on the Ethereum blockchain, and it will allow asset services, distributors, and asset managers to reduce costs significantly. This will be achieved by eliminating several redundant services, while also enhancing transparency and making it easy for digital funds to be distributed.
In an interview with news source Cointelegraph, a spokesperson for Credit Suisse Asset Management explained that the major function of the platform would be to streamline the distribution of funds. The company is now gearing up to incorporate smart contracts and blockchain technology into its infrastructure, with the aim of providing easier account registration and management services, while also optimizing activities like transaction completion, cash settlements, and transaction reporting.
The spokesperson additionally explained that the new system uses the Quorum protocol as a private blockchain to ensure optimal performance and guarantee privacy. Also, while the product will be Ethereum-based, the spokesperson confirmed that it doesn’t mean the institutions will be making use of digital assets. For now, it’s just a blockchain application.
He explained that they’ve come to understand that blockchain application can be achieved without associating with cryptocurrencies, and given how blockchain has proven to be an effective technological concept, they’ve decided to incorporate it nonetheless.
“Contour” and Optimizing International Trade Transactions
The launch is evidently a sign of the growing influence of blockchain technology across Europe, especially with its ability to improve financial processes and provide improved efficiency for the banking space.
The firms are certainly not the only ones looking to harness the power of blockchain to improve their services. Earlier this month, the South China Morning Post (SCMP) reported that eight major banks – including BNP Paribas, HSBC, and Citibank – have been working on a blockchain-based trade and finance platform that is now set to launch in the second quarter of the year.
As the news source explained, the platform, which has now been named “Contour,” has already been tested on letter-of-credit transactions totaling about $30 million last year. These transactions essentially work as payment mechanisms in international trade. It involves a bank providing a seller with a guarantee of payment by a buyer.
Ajay Sharma, the Regional Head of Global Trade and Receivables Finance for HSBC, explained to the SCMP that the platform could be a useful part of the company’s operations going forward, especially with the coronavirus dealing a significant blow to physical commercial activities.
“Leveraging blockchain for trade finance has overcome the physical constraints we are having today,” he explained, adding that the company will be looking to expand Contour round the year – especially after its Q2 launch.