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How Will Blockchain Benefit the Wealth Management Industry?

Blockchain has transformed (and is continuing to transform) the way many businesses approach financial services.
Zak Goldberg is a Law & Business Graduate from the University of Leeds who has chosen to follow his aspirations of becoming a full-time published writer, offering his expertise on all areas of law, finance and business.
Zak Goldberg is a Law & Business Graduate from the University of Leeds who has chosen to follow his aspirations of becoming a full-time published writer, offering his expertise on all areas of law, finance and business.

Image via BTC Keychain/Flickr CC

As one of the most lauded and useful technological developments of the last decade or so, blockchain has transformed (and is continuing to transform) the way many businesses approach financial services.

Wealth management companies like GAM are one such business type which could reap the rewards of embracing fintech, as they deal with large amounts of money and valuable assets, and as such require the most up to date technology to deal with this. Here are some of the ways blockchain could revolutionise wealth management.

Data Storage/Security

Blockchain’s uses for storage solutions like Cloud are already being explored and implemented, with companies like Storj offering a blockchain alternative. Given that data storage can be very expensive, this solution could pave the way for a cheaper and more effective method.

Blockchain is also incredibly secure, acting as a decentralised, virtually hack-proof system. The clients of asset management companies would no doubt value the added security it offers, and so the companies themselves may well receive more custom as a result.

Records

Given that blockchain is a completely immutable ledger, records of all transactions and dealings can be easily accessed by those with permission. This means that the auditing process (which is a necessary part of wealth management) is much simpler, as there is an accessible and easy to follow trail of information.

This cuts down on many of the costs of storing client details and the auditing process itself, meaning that wealth management companies can use the money they save to continue growing as a business.

Smart Contracts

Perhaps one of the most innovative uses of blockchain technology is its facilitation of ‘smart contracts’, which, as the name suggests, are revolutionising the way contracts are made and managed. They are legally binding, and are digitalised contracts which are entered on the blockchain.

The blockchain itself acts as a type of middle man/contract manager, ensuring that the terms and preconditions of the contract are kept and that there are no mistakes or delays when money is being paid out. This once again adds security and confidence to the service being offered by wealth management companies, and is an effective way of ensuring contracts are fully binding.

There will likely be more uses found for blockchain as more and more companies invest in the unique and effective technology. Wealth management companies are already adopting it into many of their business operations and practices, so it is certainly worth keeping up to date on its progress in the nonstop financial services sector.