France's Biggest Bank, AXA IM Look To Break Fresh Ground With Blockchain

BNP Paribas is partnering with AXA Investment Managers to develop a blockchain-based solution for fund distribution, in the latest push by big firms to make use of the nascent technology.

France's largest lender's Fund Link platform aims to make the fund distribution process easier and more efficient by using blockchain to facilitate information transfer between fund buyers and sellers, BNP Paribas said in a statement earlier this week.

A main objective of the platform is to streamline the onboarding process for both fund buyers and asset manager, BNP Paribas says, as buyers will only have to upload their profile and investor documents once. This information will then be shared with various management companies using the platform.

Distributed ledger technology, or blockchain technology, is a virtual distributed ledger of transactions shared peer-to-peer that can record ownership across a public network of computers rendered tamper-proof by advanced cryptography. It is already known as the platform underpinning the controversial digital currency bitcoin. The technology is seen as having uses that go far beyond financial transactions to areas including transfer of legal agreements, for example.

The technology is causing a stir within the financial services sector as its supporters believe it could reduce hidden expenses in the financial system by ousting inefficiencies across areas such as payments, syndicated loans and equity clearing.

BNP Paribas' announcement followed a similar move by asset management giant Northern Trust in February, which saw it partner with IBM and other stakeholders to create a blockchain-based solution that facilitated the administration of a private equity fund managed by Unigestion.

The Parisian bank says its new platform “will allow for efficient control and transparency of the distribution chain while removing unnecessary delays and reconciliation costs”, giving a nod to those who back blockchain for its supposed ability to trim inefficiencies and business costs.

The bank claims the platform will use “powerful analytics tools” to help investors compare and select funds, and fund managers to fine-tune their distribution.

BNP Paribas will open the project to other clients “in the near future,” it said.

“There are so many new and exciting ways technology can enhance the fund distribution process,” Jean Devambez, head of product and client solutions, asset and fund services at BNP Paribas Securities Services, said. “With this platform we aim to bring many of them together to streamline fund distribution, create efficiencies and ultimately lower client costs.

“A key ambition has been to ensure the new platform helps asset managers meet the demands of new regulations, such as MiFID II, which will demand higher levels of transparency around the fund sales process.”


Nick Kalikajaros 2017