Deutsche Bank is turning to blockchain technology to address margin compression in the financial services sector. The German bank has started testing a platform on the Ethereum network, aimed at offering digital services for tokenised funds through Project Guardian. 

“It will help us stay relevant, because with the kind of margin compression impacting the overall financial services industry, the only way one can survive is by innovating,” says Anand Rengarajan, the bank’s Asia-Pacific and Middle East head of securities services and global head of sales, to Bloomberg (paywalled).

He adds that blockchain and smart contracts, which are self-executing software programs on blockchains, can reduce costs, transaction times, and risks.

Advertisement
PostTrade 360 Nordic 2024

Proof-of-concept

Deutsche Bank’s platform will provide record-keeping services for issuers of tokenised funds, facilitating investor tracking, custody arrangements, and valuations. While currently a proof-of-concept, the bank hopes to commercialise the service. This initiative follows their partnership with Swiss crypto technology firm Taurus SA to develop a digital-asset custody service.

Project Guardian is a collaborative effort involving policymakers and financial firms to explore tokenisation use cases across fixed income, asset management, and foreign exchange. This project is a key part of Singapore’s strategy to become a global blockchain hub. Participants include JPMorgan Chase, DBS Group, Ant International, Standard Chartered, and T. Rowe Price Group. They aim to establish industry standards for tokenisation, especially in cross-border forex settlement and bond trading.