JPMorgan Chase and Oliver Wyman release latest blockchain report: Blockchain creates more revenue opportunities for asset managers (download the full report)

A new report jointly released by JPMorgan Chase and consulting firm Oliver Wyman (download the full report) believes that blockchain technology creates opportunities for asset managers.

The report, published on July 13, seeks to position the emerging technology as a means for asset managers to better serve their clients. It provides a broad overview, ultimately arguing that the industry sector needs to “get off the sidelines” and begin exploring how it can adopt the technology.

“Blockchain technology can increase revenue opportunities by facilitating improved data feeds, greater liquidity and lower friction costs,” the report states. “Asset managers will be able to serve clients in new ways, such as real-time reporting or alternative trading strategies.”

The report is the latest in JPMorgan’s testing of blockchain technology, following the company’s public disclosure of its testing of blockchain applications earlier this year.

Additionally, the report comes at a time when members of the asset management community have been notably silent on the technology.

So far, big industry leaders including BlackRock , Charles Schwab , Fidelity and Vanguard have been quietly developing their efforts, with Fidelity alone exploring the technology through its internal innovation arm.

Blockchain technology adoption trends

The report sees three waves of adoption of the technology by asset managers, with the first set to form between now and 2019. The final wave, which the report sees as a period of development of 'critical infrastructure' around the technology, is forecast to occur between 2030 and 2020.

According to JPMorgan and Oliver Wyman, the current wave of adoption will see the development of 'simple applications' focused on communicating data between parties on a network, while the second wave will produce systems for storing 'core transactional data'.

However, the report also argues that this will all depend on the success of early trials and the winding down of existing services that offer the same functionality.

The third wave of adoption will see ‘major capital markets infrastructure’ being enhanced or entirely replaced by blockchain applications, the report said.

“Once assets are tokenized and held on a blockchain, clearing and settlement of trades across multiple asset classes can move to a distributed ledger-based infrastructure, rather than through the hybrid or dual systems designed in the first two waves,” the report said.

“This will significantly cut processing cycles and unlock liquidity,” the report added.

The report gives a relatively vague description of the final wave, which will see widespread adoption of the technology, but whether this will be driven by incumbents or new startups remains to be seen.