German banking giant Deutsche Bank AG is exploring blockchain technology to ease margin pressure.
A recent report reveals that Deutsche Bank is testing an unnamed Ethereum-based platform focused on tokenized funds. Tokenization, which involves creating blockchain-based representations of real-world assets, is projected by Citigroup to become a $5 trillion market by 2030, encompassing bonds, real estate, and private equity.
Deutsche Bank plans to use this platform for record-keeping services, assisting token fund issuers in managing investor information. The platform’s interoperability ensures that any fund manager can utilize it, regardless of the underlying blockchain technology.
Anand Rengarajan, the bank’s head of securities services for Asia Pacific and the Middle East and head of global sales, stated that blockchain and smart contract-based solutions can help the bank reduce costs, transaction times, and overall risks.
“This will help us stay relevant,” Rengarajan said. “With margin pressure affecting the financial services industry, innovation is the only way to survive.”
Margin compression refers to shrinking profit margins in financial services due to rising costs, regulatory pressures, and increased competition.
Currently, the project is in the proof-of-concept stage, but Deutsche Bank plans to commercialize it in the future.
“The investments we’ve made over the past few years and those planned for the next two to three years should pave the way for a strong business future,” Rengarajan added.
The platform is part of the Monetary Authority of Singapore’s (MAS) Guardian project, which explores tokenization use cases across fixed income, asset management, and forex. Deutsche Bank joined Project Guardian on May 14 to test the feasibility of asset tokenization applications in regulated markets.
Other major participants in the MAS initiative include JPMorgan Chase & Co., DBS Group, Ant International, Standard Chartered Plc, and T. Rowe Price Group. The aim is to develop industry standards for tokenization in areas such as cross-border forex settlement and bond trading.
While Deutsche Bank is optimistic about blockchain technology, it remains cautious about cryptocurrencies. A recent report from the bank raised concerns about the stability and solvency of Tether, highlighting issues with transparency and the risk of decoupling events.
