High costs, little uniformity and coordination difficulties. Experts in the fund business have been criticizing these points for years. Funds On Chain wants to change that using blockchain.
Blockchain technology has given the world a completely new financial sector that is now increasingly gaining a foothold in the mainstream. It is primarily the renunciation of middlemen, so-called intermediaries, coupled with a higher transaction speed that makes the crypto space so attractive. In contrast, the traditional financial sector is still in the digital development process. Although a few projects already exist that link the possibilities of the blockchain with their services, a large number of market participants still rely on conventional distribution methods. A circumstance that Funds on chain want to change using blockchain technology.
The start-up has made it its business to tokenize the fund business. It is primarily about the processing of fund transactions. So far, there has been a high degree of heterogeneity in the individual settlement processes, says Funds On Chain CEO Volker Braunberger in an interview with BTC-ECHO.
A large number of intermediaries are involved in the transactions. That makes the process extremely expensive because it is hardly digitized. Ultimately, Funds On Chain is about removing market participants who are not required from a regulatory point of view from the chain.
Volker Braunberger opposite BTC-ECHO
Braunberger estimates that just by eliminating coordination problems, so-called reconciliation expenses, which arise from the use of different systems, only in Europe could savings of 5 to 10 billion euros per year.
We believe that with our first test runs we can prove that we can walk through the door with around 50 percent less costs. If you then look at the volumes in the industry, it’s just insane.
Volker Braunberger opposite BTC-ECHO
“Funds On Chain has unicorn potential”
Initially, the Saarbrücken-based company will concentrate on the European financial sector. With the platformbased on DLT technology from Hyperledger Fabric The Funds On Chain CEO says that fund volumes of up to 20 trillion euros can be heaved onto the blockchain. For the next five years, the former management consultant is already anticipating a market share of 1.5 to 3 percent. “I firmly believe in this idea. From my point of view, it even has unicorn potential ”.
The company from Saarbrücken knows with the ERGO, the MEAG and BNP Paribas Well-known partners at his side who support Funds On Chain with technical expertise. In addition, seed funding was recently started, which should provide the start-up with additional financial resources to realize its vision in April.
Braunberger also shares the assessment of some experts that the traditional financial market has overslept digitization. The EU countries lagged behind other nations. Germany has made a good step forward with new laws such as the eWpG and the crypto fund shares regulation, but it is still relatively slow compared to the UK, for example.