GUERNSEY will remain the focus of Northern Trust’s innovation of using blockchain technology for private equity fund administration, even if the project takes off and goes global.
The wealth manager last week unveiled its new development based at its Guernsey office in Admiral Park.
It is expecting plenty of interest in the product and ‘slow and steady’ growth, and the local office will be at the centre of developments for the Europe, Middle East and Asia regions.
Guernsey-based product manager Stuart Lawson said discussions with potential clients of the technology were already under way.
And while the company could look to roll it out in other regions, including Asia-Pacific and the US, it intended to keep Guernsey as its centre of excellence for both private equity and the blockchain for the EMEA region.
He expected the technology to be of most appeal to new fund launches.
Given the limited lifespan of the majority of private equity funds, the cost of a switch to the blockchain platform could be prohibitive to a fund manager, however Mr Lawson said that the blockchain solution could make a fund launch much more simple.
‘Groups launching new funds will look very seriously at the way the blockchain can shorten the time to market,’ he said.
The group also expects to attract interest from current fund manager clients and prospective new clients.
He said that a number of clients were interested to be in the place of fund manager Unigestion, whose fund is the first to use the new technology, or keen to follow.
‘We have a very ordered way of rolling this out,’ Mr Lawson said. ‘We will be market testing for a period and talking to existing and prospective clients too. We have a number of meetings lined up on a selected basis. We’ve had interest from everyone we’ve spoken to so far and it will be interesting to see what follows, to see how this converts into prospective new business.’
This interest could see ‘two or three’ new funds launched with the blockchain administration during the rest of the year, and Mr Lawson expected the development to have considerable impact for Northern Trust and for Guernsey too.
‘This is innovative and very new, so this is very early, but at the same time we have a lot of interest in the market place, which has to be good for Guernsey as the first jurisdiction to be associated with application of blockchain in this context.
‘With all the interest we’ve seen so far it bodes well for the way this can be developed and rolled out. Already the island has shown to us that it’s very keen to promote itself as being at the centre of this and encouraging innovation.
‘There is a real opportunity for the island to say it supports blockchain and to promote itself as a jurisdiction flexible enough to move with the times.’
Mr Lawson said it would be interesting to see the reaction from rivals in the fund administration sector. Some will be looking at blockchain developments, but few will be able to match Northern Trust’s total investment of $2bn in a technology and innovation programme over a three-year period.
And the development could make a difference for the a local industry. which, Mr Lawson admitted, had been ‘in a bit of a lull’ in recent years, certainly in relation to attracting new fund managers to the island, for a number of reasons, including macro economics and EU regulation
‘This could be a game changer,’ he said, particularly with private equity at a high as investors continue to search for better returns.
Mr Lawson praised the involvement of the States and the Guernsey Financial Services Commission in assisting Northern Trust and partners IBM through the process of establishing the model in the island.
‘We were looking for support from the States and the regulator and both have been very supportive and very engaged.’
Stuart Lawson is one of the speakers at a conference on blockchain taking place tomorrow at St Pierre Park Hotel, organised by Startup Guernsey.