Capital markets News

FNZ launches blockchain solution for entire South African funds sector

fund administration

Today FNZ said it is in production in South Africa with its blockchain-powered fund trading and settlement solution ChainClear. Last May, the UK fund and wealth management company landed the deal with FinSwitch, which connects the unit trust and fund management sector in South Africa.

Because the platform uses blockchain, it provides a single “source of truth” regarding fund ownership which is federated across participants, including 140 financial institutions. This reduces the need for asset managers and transfer agents to reconcile various fund ownership records with the associated cost savings.

“The FinSwitch blockchain, powered by FNZ, presents an opportunity to fundamentally re-architect the existing operational topology of the Collective Investment Scheme industry in a way that brings about dramatic improvements in efficiency and cost reduction for all stakeholders, ensuring that costs will be significantly reduced over time, making investments more affordable to the end investor,” said Nick Baikoff, Managing Director at FinSwitch.

The real-time automated end-to-end process replaces a batch processing solution. Although the platform is already processing hundreds of thousands of trades and transactions every week, for now it is still running in parallel to the legacy system.

“This development takes the South African market to the forefront of managed fund servicing globally,” said Hugh Evans, Managing Director at FNZ South Africa.

FNZ has grown rapidly over the last year. Last May, at the FinSwitch announcement, it had assets under administration of £400 million ($549m), which have since increased to £700 million ($960m).

The ChainClear solution uses the Hyperledger Fabric enterprise blockchain.

Meanwhile, the fund sector is increasingly adopting blockchain. Other companies deploying the technology include CalastoneFundsDLT, the UK’s TISA, France’s IZNES and Allfunds.