Jonny Fry, CEO of TeamBlockchain Ltd, shares his opinion on DTL within the Asset Management Industry.
DLT will have a huge impact in asset management, as it has the opportunity to remove many of the current third parties which have led to the annual management charge of many mutual funds being stated as 1%, yet the total expense ratio often being 2.5% or even higher. A good example of this is the work that the Northern Trust and PWC are doing to simplify audits of Private Equity fund.
Initial Coin Offerings have created a new asset class, which to date is uncorrelated with other major asset classes. This offers fund managers an opportunity to diversify their portfolios and potentially improve the risk adjusted returns for their investors.
I see DLT a little like the skeleton of a body, and from this we will see other technologies hang off it, like AI, IoT, Big Data etc. For example, there is a Spanish listed company called Nostrum, who are building a Crypto Franchise model to expand their chain of fast food restaurants in France and Spain from 138 to over 800 in the next five years. They have developed the technology so that when you go in to one of their restaurants, they recognise you via your phone. You can then pick food and a drink, and when you sit at a table and look up at a monitor, there will be a picture of your face and the items that you have selected. All you then do is put your thumb up and it will deduct the price from your phone, send you a confirmation of what, where and when you purchased and update your wallet. Using IoT and DLT, this removes the need to handle cash and reduces the number of staff that you need in a restaurant, while making it faster for one to buy and pay for food.
The above is not without its challenges, including regulation and tax, but it is encouraging that the FCA are listening and not stamping out innovation, but actually, via dialogue and examples like the sandbox, are encouraging the industry.
It’s faster for one to buy and pay for food.
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