In a report, consulting firm EY has discussed how wealth and asset management companies are seeking to tap the benefits of blockchain as well as key challenges to adopting this technology.

Titled “Blockchain innovation in wealth and asset management”, the report highlights near-term practical applications for blockchain and how to approach blockchain innovation. Speaking of blockchain application in wealth management, the authors believe that the technology could help build a client profile more efficiently.

“Blockchain can be leveraged to build a client profile in a much more efficient way. Storing client profile data on a blockchain allows for data points — profile data, preferences, net worth, account information, social media profiles — to be shared as needed, with each individual block of data being stored securely, but permissioned for access by the individual (read, write, edit) as needed”, the report states.

It pointed out that blockchain technology allows the distribution of trusted value transfer and execution, without the need for intermediaries.

Further highlighting the challenges to blockchain adoption, the report said that scalability is expected to be a hurdle to industry-wide adoption for many organizations. Moreover, as the technology itself is in early stages, many wealth and asset management practitioners are not very familiar with how this technology actually works and its potential benefits.

The report also noted that there are “significant unknowns” related to the regulatory and legal hurdles that exist in wealth and asset management. In addition, data privacy and high cost involved in replacing existing infrastructures may also act as hurdles to widespread adoption.

“Despite these challenges, EY believes that blockchain technology can be applied to solve business needs for wealth and asset management firms’ middle- and back-office internal processes first, before there can be widespread impacts to industry business models”, it added.

The report further outlines an opportunity assessment strategy aimed at blockchain adoption. It includes:

• Establishing a framework for identifying the areas of opportunity and threats and defining relevant use cases for analysis
• A team structure that includes key stakeholders, as well as select subject-matter experts
• A communications plan for socializing findings and decision-making
• A prioritization matrix or framework for identifying key use cases for the execution roadmap

EY said that it is currently working with its clients on blockchain strategy development and impact assessments, innovation lab build-outs, and proof of concept creation and management.