Ethereum
Deutsche Bank tests Ethereum-based platform to alleviate margin compression
German banking giant Deutsche Bank AG sees blockchain technology as a way to alleviate margin compression.
A new report suggests that Deutsche Bank is testing an unnamed Ethereum-based platform. According to the bank, the platform offers services focused on tokenized funds.
Tokenization is the process of creating blockchain-based representations of real-world assets. Citigroup Inc. estimates the tokenization market could reach $5 trillion by 2030, spanning bonds, real estate and private equity.
The bank will leverage this platform to offer recordkeeping services to help tokenized fund issuers manage investor information. The platform is also interoperable, ensuring that any fund manager can use it regardless of the underlying blockchain.
According to Anand Rengarajan, head of securities services for the Asia Pacific and Middle East region and global head of sales, by using blockchain and smart contract-based solutions, the German banking giant can reduce costs, transaction and overall risk.
“This will help us stay relevant, because with the kind of margin compression that is affecting the entire financial services industry, the only way to survive is to innovate,” Anand said. said.
Margin compression refers to the reduction in financial services profit margins due to increasing costs, regulatory pressures and increased competition.
For now, the project remains a proof of concept, but the bank plans to commercialize it in the future.
“The investment we will make in the next two to three years and what we have achieved in the last two to three years should pave the way for a good business future,” Anand added.
The platform is part of the Monetary Authority of Singapore (MAS) Project Guardian. Through this collaborative effort, policymakers aim to explore use cases for tokenization in the areas of fixed income, asset management, and foreign exchange.
Deutsche Bank joined the Guardian project on May 14 with the aim of testing the feasibility of asset tokenization applications in regulated markets.
Other big names working with MAS include JPMorgan Chase & Co., DBS Group, Ant International, Standard Chartered Plc and T. Rowe Price Group. The aim is to develop industry standards for tokenization in areas such as cross-border currency settlement and bond trading.
While Deutsche Bank is bullish on blockchain, the same cannot be said for its outlook on cryptocurrencies. A recent report The bank questioned the stability and solvency of Tether, highlighting concerns about transparency and the risk of unpegging events.
Tether rejected these claims, criticizing the report for its lack of clarity and substantial evidence.