Deutsche Bank AG is leveraging blockchain technology, particularly Ethereum-based platforms, to tackle margin compression challenges in finance.
Deutsche Bank AG, a German banking giant, plans to use blockchain technology to address margin compression difficulties that are prevalent in the financial services industry. Because of this, the financial institution has already begun conducting tests on a platform that is based on the Ethereum network.
Through the implementation of Project Guardian, which is a program by the Monetary Authority of Singapore, the platform offers digital services for tokenized monies. The purpose of this research is to investigate the possible benefits that blockchain technology may offer in terms of both efficiency and liquidity.
Deutsche Bank Seeks to Address Margin Pressure
As passive investment products continue to gain popularity in the market, fund managers are experiencing a continuous drop in the revenue they receive from fees. A study by the Boston Consulting Group found that the average asset management cost dropped to 22 basis points in 2023.
Compared to the 25 basis points charged in 2015 and the 26 basis points charged in 2010, this represents a significant decrease. The purpose of Project Guardian is to investigate the applications of tokenization in the fixed-income, asset management, and foreign exchange sectors.
This endeavor is a collaborative effort between policymakers and financial organizations. Project Guardian is a program led by Singapore’s Monetary Authority. Its goal is to investigate the possible benefits that blockchain technology may offer in terms of both liquidity and efficiency.
According to him, contract solutions can also assist the banking giant in reducing costs, risks, and the amount of time it takes to complete transactions. Conducting Research on Tokenized Fund ServicesDeutsche Bank, a German financial institution, plans to launch record-keeping services with the goal of supporting tokenized fund issuers in investor monitoring, custody arrangements, and valuations.
Rengarajan asserts that this project exemplifies the bank’s dedication to utilizing blockchain technology in order to achieve greater levels of efficiency.
The platform’s design places an emphasis on interoperability, which guarantees accessibility for fund managers regardless of the blockchain technology that is fundamental to the platform. Rengarajan further views commercialization as the eventual goal for the project, despite the fact that the idea is now in the proof-of-concept stage.
He went on to say that Deutsche Bank had formed a partnership with Taurus SA, a crypto technology company based in Switzerland, in order to commence the creation of a digital asset custody service. A month ago, the world’s largest financial institution referred to Bitcoin as a significant asset class.