At this current moment in time, big banks are debating how blockchain technology could be used to improve their financial services. Many are working with others to launch pilot projects. Vanguard is working with Center for Research in Security Prices and Symbiont to launch a blockchain network which aims to improve the speed and accuracy of the capital markets. The dedicated network will be created by Symbiont, and has been designed to allow investment managers to receive and process data from CRSP instantly.
Other large banks are also following suit, and are developing blockchain projects on the promise of creating faster transactions.
The Vanguard effect is similar to this. It will automatically ingest index data that is being shared on a decentralised database, obtaining a complete and more importantly up to date picture of the market, which will ultimately yield better returns for the clients.
The project does have some flaws though. At the present moment, it is painstakingly manual, but this does not stop professionals having great faith that it will work. Caitlin Long, Symbiont’s president and chairman said;
“Index data is about as mission-critical for Vanguard as a technology can get…It is critical that portfolio managers have accurate and time index data, and this technology will allow them to do that.”
A test version of the network was launched by Symbiont in September, and after a little rebalancing successfully processed 5,415 validated transactions. The network requires four nodes to be secure and stable, and it is currently running on seven, which allows the network to potentially grow to hundreds of participants.
Vanguard has a very different approach to blockchain technology, prompting Long to say;
“Instead of going out and building a consortium, [Vanguard] reached out to a close counterparty and said ‘Let’s do this together and then let’s open it up for others to come in.’”
Other banks are set to follow suit, and create their own various blockchain projects.
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