Why you should consider certified financial managers
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By Tom StaggsThe financial industry is increasingly using a technology known as smart contracts to help financial institutions manage their risks, said David Leffler, a senior vice president at Cushman & Frierson LLP, which is representing investors in the blockchain-based smart contracts.
The smart contracts allow companies to transfer information about a company’s assets and liabilities without having to rely on paper records or relying on third-party intermediaries.
But there are challenges in using smart contracts on a daily basis, Lefflers said.
Smart contracts could be the next big thing in financial management and financial technology, he said.
“The big difference between these systems is that the system is decentralized, which allows for the ability to change the terms at any time,” he said, adding that the blockchain makes it possible to build trust.
For example, an investor might want to know how much a company owes, and then have a system run to verify the accuracy of that information.
The process can be complicated because there are several layers to the transaction, including how to track and record transactions, and how to determine whether a contract is valid.
The use of smart contracts is being used in an increasing number of ways, including with the issuance of loans and mortgages.
The financial services industry has invested heavily in smart contracts and blockchain technologies, including the introduction of a new smart contract-based mortgage servicing system, the launch of a blockchain-enabled mortgage-servicing company and a smart-contract platform for mortgage brokers.
The rise in smart-casual lending, which can be used to secure and secure loans and mortgage products, has been seen by some in the financial services world as a sign of a broader shift toward a decentralized financial system.
In the future, the technology could allow companies like Fidelity Investments, the largest mutual fund company, to set up lending relationships with customers that will allow them to access financial data from the blockchain and make loans and deals with a greater degree of privacy.
The development has also been seen as a way to ensure that financial information stays private, as well as a means to ensure the security of the information stored on a blockchain.
In its latest report, the New York-based financial services company said that the financial industry has spent $4.7 billion on smart contracts for financial products, with the technology enabling companies to build on a wide range of applications.
The report found that a large portion of the $3.4 billion in smart contracting revenue was spent on smart-coding services, including for mortgage servicing and consumer credit products.
It said that, based on an analysis of transaction data from more than 1,000 financial products sold in the U.S. from January through December, the financial technology industry was valued at $3 billion.
“Smart-capping services allow companies such as Fidelity and JPMorgan Chase to leverage existing financial services platforms and build on existing applications, such as a blockchain, to provide a robust and secure financial management system that can be deployed quickly and efficiently in a distributed fashion,” the report said.
The new blockchain-powered smart contract platform, Hyperion, is one of several projects focused on the development of smart-coded financial products.
The Hyperion platform is backed by a new technology called Ether, which could help the financial system function in a more decentralized fashion.
The company said it would soon begin providing a blockchain platform to financial institutions.
The technology that Hyperion and other blockchain projects are building on are not designed to replace traditional financial institutions, but instead are aimed at creating a new type of system for financial services that is built on a decentralized, trustless model, said Peter Fritsch, CEO of Hyperion.
Hyperion has a number of financial services partners, including JPMorgan Chase, Wells Fargo and Citi.
Fritsch said that blockchain-driven financial systems are an attractive way to enable new types of applications that have the potential to have a large impact on the financial sector.
“It is not only about creating a platform that has the power to allow financial transactions to be processed by a third-parties, but also to provide financial services for the benefit of the public,” Fritch said.
By Tom StaggsThe financial industry is increasingly using a technology known as smart contracts to help financial institutions manage their…
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