Blockchain, a secure way to share data
We are less than 6 months away from the deadline of December 31, 2022, date at which External Asset Managers (EAMs) and trustees will have to file their application for authorization with the FINMA in order to continue their activity in Switzerland.
This is the right time to take stock of the situation and to highlight the potential of blockchain for data sharing.
Some have taken the opportunity to review their business model, others have simply chosen to formalize processes already in place. The EHP form (authorization form to be filled out on the FINMA website) has also highlighted issues that are sometimes underestimated, such as the need to adopt a data protection policy and to integrate it more globally into the company’s risk management strategy.
“The guarantee and control of data security have become essential points of attention for the good practice of the profession”
Indeed, the guarantee and control of data security have become essential points of attention for the good practice of the profession.
These requirements arise in a context of digital transformation that has been underway for several years. Faced with the increase in exchanges with customers, the use of digital technology facilitating interactions, while ensuring a level of data security, has become essential.
At the same time, a growing number of EAMs and trustees have equipped themselves with Portfolio Management Systems (PMS) in order to optimize the management of their portfolios in a context of control and compliance with new requirements in terms of “suitability” and “appropriateness”, while meeting data security standards. In this context, the quality of information collection, the security of storage systems and the security of data are integral parts of the reflection to be carried out by the External Asset Managers.
“Through the use of blockchain, the banking industry ensures a simplification of exchanges and above all secures the sharing of available information.”
The banking industry is naturally very attentive to these issues, constantly exchanging with their EAMs partners. Several of them, such as the Gonet bank which was one of the first, have adopted blockchain technology in order to facilitate the sharing of data within the framework of the implementation and updating of the documentation specific to the independent asset manager. By this means, the banking actors ensure a simplification of the exchanges and especially secure the sharing of the available information.
Blockchain technology has the advantage of using simple procedures, while integrating a higher level of security and above all being auditable in real time. The unfalsifiable time-stamping of information, i.e. the fact of being able to link a precise date and time to a given event, is a key element of this technology that is too often wrongly summarized as bitcoin. The use of blockchain opens up a wide range of possibilities, and its potential in Swiss banking compliance is particularly relevant and promising. The identification of interlocutors thanks to the security provided by blockchain is another asset to consider in the fight against fraud.
“Wecan Connect as an example”
The ability to exchange and share information in private circles is becoming increasingly important as clients become more inclined to use digital technologies. As an example, the Swiss company Wecan has launched Wecan Connect, the instant messaging service for private management, allowing exchanges between players in the sector in complete security.
The issue of data classification, security and backup deserves special attention and blockchain offers, among other things, solutions to address this. The role of a banking partner is not only to accompany independent managers in their reflection, but also to continue to provide them with facilities enabling them to work efficiently.
Maryline Stiegler joined Banque Gonet in 2016 as Head of the External Asset Managers Department, coming from the Société Générale Group where she held worked at senior levels in the field of business development in connection with international institutional clients, in Paris and then from 2008 in Geneva. Maryline is CWMA certified.
Banque Gonet & Cie SA
Serving a clientele of private individuals and independent asset managers, entrepreneurs and company directors, the Bank offers a full range of products and services (asset management, financial planning, pension planning, taxation, philanthropy). In the area of investments in particular, it offers a wide range of modular and highly customizable solutions in advisory management, discretionary management and semi-institutional management. At the end of 2021, assets under management amounted to approximately CHF 5 billion.