New Blockchain Consortium Formed in Luxembourg

A new blockchain consortium comprising of 10 key players of the Luxembourg fund industry has been formed with the aim to explore the potential of blockchain technology to improve efficiency and create new business opportunities in the asset management industry.

The initiative, called Fundchain, was set up by Scorechain, a Luxembourg-based company providing Bitcoin and blockchain services, and counts ten major financial institutions as founding members: BIL, BNP Paribas, CACEIS, European Fund Administration, HSBC, ING Luxembourg, Pictet, RBC Investor & Treasury Services, Société Générale Bank & Trust, and PricewaterhouseCoopers (PwC) Luxembourg.

Pierre Gérard, CEO of Scorechain, said that the coalition intends “to move beyond slideware and begin developing prototypes to test their integration within existing infrastructures.”

“We have already identified several use cases in the fund distribution and asset servicing industry that could be interesting topics,” Gérard said.

According to Sebastien Danloy, CEO of RBC Investor Services Bank SA, “blockchain should be viewed as a fundamental infrastructure.”

“It will be a key part of how the client experience is reconfigured and retooled and the funds industry needs to tale the rise of blockchain and fintech seriously, learning from and working with this emerging sector to turn potential disruption into opportunities,” Danloy said.

For Pierre Olivier Rotheval, head of innovation at Banque Internationale à Luxembourg, “[being] part of [the Fundchain initiative] was natural to us: supporting innovation and the national ecosystem of startups is a central component of our strategy.”

“Luxembourg fund industry is a global leader, innovation and collaboration are necessary to keep this leading position,” Rotheval said.

Luxembourg, a country in Western Europe known for its advanced banking sector and its reputation as a tax haven, has also a long-standing history as an international leader in innovation. In the Bitcoin industry, Luxembourg is known for having granted a Payment Institution license to Bitstamp, allowing the company to become the first nationally licensed bitcoin exchange in Europe.

BNP Paribas Securities Services’ head of products and clients solutions Alexandre Pirlet welcomed the new initiative, noting blockchain technology’s potential to transform the way asset managers distribute their funds, reduce costs and speed up the investment process.

BNP Paribas Securities Services has been experimenting with the technology separately through various initiatives, including a partnership with French crowdfunding startup SmartAngels to build and deploy a blockchain infrastructure that would allow private companies to issue securities on the primary market. BNP Paribas is also part of R3’s notorious banking consortium.

PwC, the world’s largest professional services firm in terms of revenue, launched a global technology team focusing on blockchain technology in January this year. The firm offers a number of blockchain services ranging from product strategy assessment, proof-of-concept development and testing, to implementation support.

“Within PwC we invest heavily in technology and expect change coming from the many fintech initiatives,” said François Génaux, financial services consulting leader at PwC.

“We strongly believe that blockchain technology could enable the asset management industry to work more efficiently, more transparently and in a collaborative mode. We are therefore extremely happy to participate to the FundChain initiative, which has the objective to demonstrate the applicability of this technology to investment funds and showcase its flexibility.

“As the leader in advising and auditing clients in this area, we are committed to the asset management industry and to proposing innovative solutions for the future.”

Separately, PwC is exploring the potential of blockchain technology in wholesale insurance through a survey and proof-of-concept prototype in collaboration with Z/Yen think tank’s Long Finance.