• IT expert expects blockchain-supported stock market world
• Blockchain offers many advantages
• Brokers have to react to survive
The blockchain is currently one of the most popular technological developments worldwide with enormous momentum. Marco Havekost from Sopra Steria even believes that the future of stock portfolios lies in this disruptive technology. As the “IT Finanzmagazin” reports, however, he is referring to much more than just “the development and expansion of trading in digital currencies”.
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Three advantages of blockchain
As the senior consultant in IT governance explains, the use of blockchain in the financial sector offers three major advantages: On the one hand, this technology improves transparency and security. Data is stored in the blockchain in such a way that it cannot be falsified, and it is also public, so that all processes can be traced by any user at any time.
Furthermore, the blockchain could form the basis for peer-to-peer communication between market participants. With blockchain-based, decentralized trading places, the classic order books would be replaced by smart contracts, thereby eliminating the broker as an intermediary on the stock exchange. Because there are no intermediaries and clearing processes are greatly simplified, the operating costs for providers of trading solutions would be significantly reduced. Given the price war in the industry, this is a weighty argument.
Finally, the use of blockchain also creates new investment opportunities – for example through tokenization. Digital tokens can represent very different types of assets – traditional, alternative and completely new, or rights of use. In principle, these can also be bonds, shares or illiquid assets (so-called non-bankable assets – nBAs), such as works of art, exclusive real estate, valuables or vintage car collections. As Havekost further explained, tokenization could also facilitate access to exchanges as an alternative to SPACS or classic IPOs. The expert cites an initial coin offering as an example.
Do brokers have a future?
According to Marco Havekost, many of these technologies and approaches are already being tested by financial service providers. However, the disruption is still being slowed down by regulatory requirements and the continued high level of customer trust in traditional providers.
Even if the IT expert does not assume that the blockchain will mean the end of brokers and custodians, he does believe that “stock trading and the role of the custodian […] will change drastically in the coming years”. Because distributed ledger technologies would increase the pressure on financial service providers to offer real added value for their customers if they still want to be relevant in the future. In order to stand out from the competition, they would have to have additional services create that go well beyond the handling of commercial processes.
Editorial office finanzen.net
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