That’s according to Ian McKenna, founder of F&TRC, who said blockchain was “the end of platforms as we know them” at his ‘Empowering Advice Through Technology’ event in Kings Cross last month.
“It’s terminal for the platform community. They don’t see it coming,” he said.
McKenna reckons the bulk of platform operators, some 95 per cent of them to be exact, overcharge today and that the real value is created through advice.
“Most of the industry is overpaying for its platform service,” he said, arguing that once asset managers start to put their fund registers on blockchain, fees will become far more transparent and prompt the question - ‘why pay for a platform?’
There was a drive five or six years ago around funds and blockchain, but it never took off.Ben Hammond, Altus
“Platform fees will be sub-1 basis point within the next seven to 10 years or sooner. There will be no margin left. The smart ones, like Fidelity, have partnered,” said McKenna.
“We can’t keep acting like turkeys. We’ve had 25 years [when platforms were first invented] to prepare for this. Frankly as an industry, we’ve sat on our hands.”
Almost a year ago, Fidelity chief executive Dame Anne Richards said her company was exploring how it could make intangible assets - such as non-fungible tokens (NFTs) - more tangible and build portfolios around them.
An NFT is a digital artwork that uses blockchain technology to prove ownership.
What does the industry think?
Asset managers moving their fund registers to blockchain will not happen overnight, according to experts, but it is possible in theory.
Investments director at Altus, Ben Hammond, told FTAdviser blockchain would work for asset management, improving processes such as trading and custody.
Firms such as Calastone and Euroclear are already doing this in the background.
“There was a drive five or six years ago around funds and blockchain, but it never took off. The technology underneath funds is still relatively archaic,” Hammond explained.
FNZ has previously appointed a ‘head of blockchain’, and True Potential was investigating the building blocks of a blockchain investment platform.
“We need to fix the technology underneath first,” said Hammond.
How do we migrate? We all know how difficult these big technology migration projects are and how closely the regulator looks at this.Mike Barrett, the Lang Cat
“Once they’re on a centralised system and using distributed ledger technology [the technology blockchains are created from], then you can move up to managing products.
