The Case for Change
The demand for innovation in how investment funds are distributed has never been clearer. Shifting investor demographics, the rise of retail investors, and the growing popularity of passive management and alternative assets are reshaping the industry. Meanwhile, many of the systems currently in use—some dating back decades—struggle to meet modern requirements for transparency, scalability, and operational efficiency.
Blockchain technology addresses these challenges directly. By leveraging a decentralised, transparent, and immutable ledger, blockchain streamlines the manual, siloed processes that dominate fund distribution today. Smart contracts, for example, can automate lifecycle events such as subscriptions, redemptions, and dividend payments. These automated solutions not only reduce errors but also accelerate processing times, allowing asset servicers and custodian to scale their operations and improve service delivery. As Olivier highlighted, “Asset servicing today is completely manual,” underscoring the urgent need for transformation.
Empowering, Not Replacing
Rather than replacing existing players, blockchain empowers asset servicers, custodians and asset managers to thrive in a digital-first environment.
It enables asset servicers and custodian to reduce their reliance on inefficient manual processes. Today, as much as 30% of fund administration remains manual, with even basic tasks like dividend payments involving multiple touchpoints. By replacing these inefficiencies with blockchain-based systems, asset servicers can reduce costs and improve scalability.
Blockchain also facilitates hyper-personalised investment solutions. These capabilities allow transfer agents and asset servicers to move beyond their traditional roles and play a pivotal part in shaping the investor experience.
Happening today
One real-world example of blockchain’s potential in action is the implementation of blockchain-based transfer agency for Standard Chartered Bank across multiple countries in the Middle east and Asia. This initiative demonstrates how blockchain can replace legacy infrastructure, enabling seamless digital fund issuance and distribution. Such advancements illustrate that blockchain is not just a theoretical solution but a practical reality that is already transforming the industry.
Blockchain adoption is not without its hurdles. Integration with legacy systems, the development of standardised smart contracts, and ensuring both cash and securities transactions are fully on-chain are critical challenges that must be addressed. These issues are being tackled through industry-wide efforts to create interoperable frameworks and establish standards for blockchain-based systems. Additionally, Blockchain should be seen as part of a broader digital transformation strategy, rather than the sole focus of innovation efforts.
A phased approach to blockchain adoption can also mitigate disruption. By gradually integrating blockchain based solutions into existing systems, asset servicers, distributors and custodians can experience their value while maintaining continuity.
A Better Investor Experience
The ultimate focus of blockchain adoption should be on improving the investor experience and value for money. By transitioning from siloed custody models to a transparent, registered chain, all intermediaries and asset servicers can provide better access to investment opportunities for both retail and institutional investors. This shift not only enhances operational efficiency but also redefines the role of asset servicers and custodians as key facilitators in an increasingly interconnected and digitalised ecosystem.
Far from displacing asset servicing, blockchain technology empowers it to evolve. Those who embrace this transformation will find themselves at the forefront of a more agile, scalable, and investor-centric industry—ready to shape the next generation of fund distribution.
This article is inspired by the panel discussion “Will Blockchain Technology Kill Asset Servicing?” held at the Digital Assets Week conference in London. View the panel discussion .