Columbus, GA – December 23, 2019 – Delta Data, a fin-tech company providing infrastructure technology for the pooled investment community, finds that Blockchain technology, which enjoyed 100s of millions of investment dollars for its potential of revolutionizing 40 Act fund trading, was a miss.
In short, Blockchain is a solution to a problem that doesn’t exist within the mature mutual fund management industry.
“The hype, largely driven by the Ponzi scheme of the decade, Bitcoin, was able to overcome the normal gatekeepers to sane technology investment,” says Whitfield Athey, CEO of Delta Data. “All fin-tech investments must meet at least one of three criteria: an increase in the revenue opportunity for the firm, solution of regulatory requirements, and a clear back office ROI. In today’s cost-conscious fee pressured environment, a project needs to meet at least two of these three requirements to be worthy of receiving funding,” he adds.
The attributes of Blockchain ledger technology include decentralization, immutability, security, and transparency, allowing for verification without third-parties dependency. Within the collective investment fund, world securities are cleared by a consolidated and mature industry that leverages services like the DTCC. These services have already enabled known and trusted counterparty networks that utilize tools, like the Delta Data or other mature, automated and STP trading systems, that operate at hyper scale with near zero reconciliation issues in an ultra-cost-effective environment.
“Blockchain vendors within the mutual fund space claim to solve three problems: trust, coordination of disparate data, and cost scalability; however, these aren’t issues within our space. Fifteen years ago, the ‘Buzzword Bandits’ hyping Blockchain today were selling data warehouses, and five years ago started to sell AI. This is another example of overhype and under delivery. Blockchain within our space is a square peg looking for a hole that would have to be drilled to find a home. Ripping out and replacing our current systems would cost hundreds of billions of dollars. Now, I will say that if we were starting from scratch, it would make sense to build on a ledger like this. But we aren’t, so Blockchain applicability may be found creeping into the industry as older systems are slowly obsolesced and replaced, and that’s not happening fast. In short, this tech is pretty late to the horse race,” observes Athey.
Blockchain’s scalability has not reached the point where it makes sense for any company within the pooled investment industry to make a significant investment to replace vetted, more efficient existing infrastructures with what is essentially an evolving technology. These findings are the result of benchmark transaction specifications stipulated by many of the largest banks and investment fund managers in the country. Currently, the fastest Blockchain service available claims a speed of 3,000 Transactions Per Second (TPS), or 180,000 per minute, and 10,800,000 per hour. Platforms like Delta Data, currently in use by the country’s largest banks and investment management companies, can process hundreds of millions of transactions per hour at a nominal cost.
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About Delta Data:
Delta Data provides back-end solutions processing billions of dollars in assets for the mutual fund industry, supporting four of the top 10 US banks, four of the top five US retirement recordkeepers, and four of the top five US investment managers. Delta Data’s industry-vetted and sophisticated SaaS integrated technology suite enables financial companies to manage the dynamic environment of regulatory change and risk associated with internal and external data management. Delta Data’s unique position within the financial industry allows for the maximum effective application of the latest technologies such as Artificial Intelligence and Machine Learning to provide a turnkey solution for financial services companies seeking to stay ahead of the change.
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