Blockchain & Wealth Management: Client On-boarding & Profiling
Distributed ledgers are very flexible once implemented. They remove all kinds of friction from the client’s onboarding to client’s profiling, streamline the management of portfolios, speed up processing and settling of trade but most importantly, they make compliance easy. Distributed ledgers are known to support the validation and execution of a transaction in real-time. This helps us eliminate redundancies in our framework, reduce operational expenses and enhance the client’s experience.
Overall, the blockchain helps us efficiently builds a client’s portfolio. The data is stored securely in blocks and shared, through permission, between parties involved as needed. This makes the data more secure and non-changeable.
Use Case: Client Onboarding and Profiling
With blockchain, wealth managers can easily onboard, profile clients, and understand their needs. Currently, this entire process is bombarded with document requirements like proof of identification, residence, marital status, business interests, credit rating etc. Usually, this process takes about weeks or minimum days to collect and verify.
Then there’s the challenge of complying with numerous reporting requirements and following security protocols. It doesn’t usually stop here but even after onboarding, managers have to constantly monitor their portfolios, which becomes a daunting task with growth, as each manager manages about hundreds of portfolios.
In order to tackle this problem today, managers use the ACH or ACAT systems but, in this world of real-time information sharing, such systems take multiple days for processing and involve manual tasks. Overall, it’s nothing but a painful process.
So in order to solve this, companies need to store each client’s profile on a distributed ledger. Trusted and involved parties will have granted access via a shared key secured through cryptography. The profile owner should initiate new relationships and, the system should have an inherent audit trail for tracking changes to the chain. As a result, processes that require fact-check will be simplified and sped up.
So what is the benefit of this approach?
Firstly, blockchain facilitates the entire client and risk profiling process. As it’s secure and automated now, managers will be able to assess the situation more confidently in less amount of time. Secondly, the quality of data captured and the quality of management will automatically increase giving the managers a higher ability to financially plan the portfolios. Thirdly, the content of the portfolio will be very transparent that will automatically place money laundering checks in place.
Fourthly, the blockchain technology chain will enhance the performance of the traditional system or even possibly replace them in the near future, depending on the penetration rate of the blockchain technology. Finally, blockchain will enable managers to make near-instantaneous transfers of assets between institutions with authenticated provenance of tracked changes.
Finally, the blockchain technology chain will enhance the performance of the traditional systems or even possibly replace them in the near future, depending on the penetration rate of the blockchain technology.
— Jura Foundation
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