Category: Industry Trends, Innovation, Technology

Now What? What Blockchain Means for the Transfer Agent


Blockchain technology promises to increase security, efficiency, and compliance. Analysts believe blockchain’s transparency could potentially reduce the need for some audits and reconciliation functions, which could potentially reduce operating costs overall.Lightbulb image(2)

So what does blockchain mean for the mutual fund industry? And for shareholder record keepers and the technology they use?

At this stage in the game, the answers to these questions are speculative because financial services companies are still in the earliest phases of experimenting with the technology.

Firms like VISA, Citigroup, and NASDAQ are exploring how blockchain can help them meet their business goals, according to Forbes. In this same article, it is reported that “several other companies and organizations have also released protocols for running… private distributed ledger networks, including… Corda, a consortium of 44 global financial institutions, including Bank of America, Deutsche Bank, Goldman Sachs, HSBC, Wells Fargo; and Ripple, which is focused on using distributed ledger technology for instant, low-cost international payments.”

Closer to home, Boston Financial’s parent company, State Street Corporation, is exploring how blockchain can be used for institutional banking, and processing and monitoring loans, mortgages, and other financial products. DST Systems, Inc., our other parent company, is running internal tests on blockchain code to demystify how it works, and building prototypes of potential use cases to determine where blockchain might be leveraged to enhance the financial services solutions they offer to clients.

Much of the industry’s experimentation with blockchain lies in how securities trades are recorded, which could affect how and when transfer agents receive information used to manage the shareholder record. This will require the same type of systematic adaptation being triggered by regulatory change like money market reform.

Our information technology team is monitoring other areas where blockchain may influence our business. For example, the minimization of the central clearinghouse function for managing trades means blockchain could reduce the number of days needed to settle a transaction from T+3 to T+0.

The open and transparent nature of the technology offers the potential to streamline compliance functions like fraud monitoring and KYC (know your customer). Lock image(2)This is because the movement of securities may be done on a private and highly secure network of trusted financial services firms; if shareholders conduct business with multiple firms within the trusted network KYC checks would only need to be done once.


While blockchain may offer real benefits and material use for mutual fund industry, at this stage, it appears as if shareholder record keeping has the potential to be influenced, but not radically transformed, by the technology.

Have a mutual fund industry topic you’d like to understand better? Let us know in the comments section and we’ll do our best to help out.

Phil Blake

Phil Blake

After a stint in the insurance industry, Phil moved over to financial services and joined Boston Financial. Since joining Boston Financial, Phil ‘s role has focused on developing new products and services on behalf of Boston Financial’s clients. As a member of the Business and Product Development team, Phil is responsible for delivering innovative products and services that help our clients achieve their business goals, mitigate risk and reduce cost. Leveraging his project management and business analyst skills, Phil enjoys working with our clients and teams throughout the organization to ensure we deliver cost-effective, innovation solutions. After work, Phil enjoys hanging out with his colleagues on the Boston Financial basketball league. The best part was leading his team to the league championship; we are all champions somewhere. Phil also has a bachelor’s degree in Business Administration from Eastern Nazarene College.


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