Deutsche Bank AG, a major German bank, intends to use blockchain technology to address margin compression problems in the financial services industry. The bank has consequently already begun testing a platform built on the Ethereum network.
The platform offers digital services for tokenized monies through the Monetary Authority of Singapore’s Project Guardian. This research investigates the benefits of blockchain technology in terms of efficiency and liquidity.
Deutsche Bank Is Trying to Handle Pressure on Margin
Fund managers continue to see drops in fee income as passive investment products become more popular. According to a study by the Boston Consulting Group, the average asset management charge decreased to 22 basis points in 2023 from 25 basis points in 2015 and an additional 26 basis points in 2010.
As a collaborative effort between financial organizations and policymakers, Project Guardian looks into tokenization applications in the fixed-income, asset management, and foreign exchange industries. The Monetary Authority of Singapore’s Project Guardian aims to investigate the possible benefits in efficiency and liquidity provided by blockchain technology. Anand Rengarajan, the head of Deutsche Bank’s securities business in Asia Pacific, discussed the situation as follows:
It will help us stay relevant, because with the kind of margin compression impacting the overall financial services industry, the only way one can survive is by innovating.
He continued that the banking behemoth may also reduce costs, risks, and transaction times by utilizing blockchain and smart contract technologies.
Examining Services for Tokenized Funds
Deutsche Bank plans to launch record-keeping services to help tokenized fund issuers monitor investors, custody agreements, and values. Rengarajan claims that this program demonstrates the bank’s dedication to using blockchain technology to improve efficiency.
Interoperability is prioritized in the platform’s design, guaranteeing fund managers can access it independently of the blockchain technology. Even though the idea is still in the proof-of-concept phase, Rengarajan sees commercialization as the initiative’s eventual objective. He continued, saying:
We anticipate that the investments made over the next two to three years, alongside previous endeavors, will pave the way for a promising commercial future.
Last year, Deutsche Bank and the Swiss cryptocurrency technology company Taurus SA collaborated to create a digital asset custody service. Last month, the banking giant also termed Bitcoin an important asset class.
