Symbiont wants to revolutionize the traditional finance world with blockchain, taking a first leap to bridge the gap by partnering with mutual fund giant Vanguard to automate its index data tracking.
Vanguard quietly began using Symbiont’s blockchain product to manage data from benchmark provider CRSP in February. Now, after three months of tried and true use, Symbiont is making the partnership public, with looks to expand the uses of blockchain for data gathering in traditional finance.
The firm is leveraging Symbiont's technology to improve how it reviews index data. Vanguard's funds follow a benchmark determined by a benchmark provider to figure out how to best allocate client funds. For 17 funds, including Vanguard's largest, this benchmark provider is CRSP.
Files from CRSP were once accessed manually throughout the day as corporate actions or changes to the index data occurred, but now, CRSP distributes the information to Vanguard through Symbiont's blockchain platform, excising the need for constant collection. Ron Papanek, head of data business at Symbiont, explained that with blockchain, everything is instantaneously updated.
“Consequently, Vanguard has the most current and correct data within their infrastructure without having to go collect the data throughout the day because it's automatically updated through with the software, through the blockchain technology,” he said.
Vanguard began quietly utilizing the tech in February, comparing the benefits of blockchain data gathering to its old manual process with more than satisfactory results. According to Papanek, the key changes here are timeliness and accuracy. Because the data is automatically updated to its most recent form, the potential for errors is reduced. Increased efficiency also means decreased costs. Vanguard’s interest in efficiency made it the right partner for this introduction, according to Papanek.
“They're pushing the envelope in terms of identifying new, more efficient processes,” he said. “We have a host of other asset managers that have been trialing our software and looking to participate in this blockchain, a distribution of index data as well. But Vanguard essentially is early on and identifying this opportunity.”
Not just Vanguard
Vanguard is the first to implement Symbiont’s technology on this scale, according to Symbiont. Mark Smith, CEO and co-founder of Symbiont, said adoption from a mutual fund giant like Vanguard is big for blockchain solutions on an enterprise level, and other asset managers are taking notice, with some already trialing the software and others reaching out after the news of Vanguard broke.
The increased transparency and speed puts portfolio managers in a better position to make timely changes to funds with more timely information on CRSP benchmarks, according to Vanguard. This could lead to better returns not just for Vanguard, but for its client base.
"We anticipate that over time, this will lead to improved benchmark tracking, reduced error risk, and cost savings that may result in better returns for our clients," said Warren Pennington, head of Vanguard’s fintech strategies team.
The use of blockchain could innovate how data is accessed and shared in traditional finance, according to Papanek. Instead of one party managing and distributing data, this opens the door for multiple parties to share and consume data.
However, Symbiont’s plans don’t end with index data automation. Papanek said they’re looking to build out the technology to service a variety of needs, with some tools already being piloted by asset managers.
“There's a whole set of services, again, dividends, voting, amendments – all types of life cycle events for financial instruments could be managed on a blockchain platform through smart contracts,” said Papanek.
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