Deutsche Börse Group’s post-trade infrastructure and services provider Clearstream has announced that Zürcher Kantonalbank (ZKB) and Clearstream successfully processed their first live blockchain-based end-to-end fund transactions, using FundsDLT, a decentralised platform for fund transaction processing.

Hereby, the overall processing time for an investor order was reduced from several hours to only a few minutes.

ZKB, or Zurich Cantonal Bank, is the largest cantonal bank and fourth largest bank in Switzerland. It is the leading financial services provider in the greater Zurich area, with total assets of over CHF 150 billion.

Cleastream stated that ZKB was the first firm to leverage the joint FundsDLT and Clearstream solution, with an end investor placing a fund transaction request via a mobile app directly on the private blockchain. The order was captured and delivered to Clearstream’s fund processing platform Vestima via the blockchain. ZKB’s client received real-time updates and, after a few minutes, the transaction confirmation on the app – a process that could commonly take several hours before.

This particular cross-border distribution of an investment fund between Switzerland and Luxembourg showed that distributed ledger technology (DLT) can foster more efficient, scalable and faster fund investing for all market participants.

ZKB exploited its existing connection to Vestima and triggered the blockchain-based fund transactions via API delivered by FundsDLT, allowing ZKB to access all 48 connected fund markets without the need for additional onboarding processes.

Peter Hubli, Head Digital Asset Solutions at ZKB, commented:

“With FundsDLT we convinced ourselves of the potential for the entire value chain in the fund business, including the improvement of customer experience, efficiency in the settlement process and the reduction of costs. The proof of value allowed us to have a sneak peek into the future of the fund industry, its potential and impact not only for ZKB, but also for our clients and partners. By leveraging blockchain technology, we get both an overview of the entire flow of assets and money and can also identify and understand investor’s needs.”

Bernard Tancré, Head of Investment Fund Services Product at Clearstream, said:

“Integration with FundsDLT was very efficient and straight-forward. It is important that our customers can leverage the advantages of blockchain starting today, with access to a large investment funds portfolio via proven, regulation-compliant and safe fund processing environments. This initiative significantly increases operational efficiency for investors, distributors and transfer agents, and we are only at the beginning of this most promising journey.”

Olivier Portenseigne, CEO of FundsDLT, concluded:

“We are delighted to see a bank such as Zürcher Kantonalbank push forward and explore the value that the collaboration between FundsDLT and Clearstream can deliver to the wealth management side. Digital transformation is today paramount for financial institutions and our goal is to enable fund distributors to simplify their business and operating model and build the technology foundation to enable their clients to connect to fund products anywhere and in an easier manner.”

FundsDLT enable all actors of the investment fund distribution chain (asset managers, asset services, distributors and advisors) to sell funds through a new generation and decentralized platform, significantly reducing administration costs and the time to process transactions. FundsDLT streamline a range of repetitive fund operational activities by using blockchain to automate several processes in a secure manner.

As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream, which is part of Deutsche Börse Group, provides the post-trade infrastructure for the Eurobond market and services for securities from 58 domestic markets worldwide. With around 14 trillion Euros in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities. Alongside its highly automated mutual fund services, Clearstream provides clients with a “one-stop shop” solution for all fund types.