The impact of blockchain on the user experience of real estate fund unit holders

By Matthieu Bouchaud, ConsenSys

In recent years, the relationship with the next generation of banks has changed considerably. This change can not only be explained by the arrival of neo-banks on the market, but also by a change in both ways of consumption and savings. The arrival of neo-banks also clearly shows that savers are increasingly reluctant to pay for basic services, such as managing bank accounts or means of payment.

The immature operational environments of some real estate funds with their numerous manual procedures and lack of integrated technical solutions, sometimes seems ill-suited to a new generation of users in search of fluidity and speed. Blockchain platforms with their automation and information sharing potential will allow different funds to better meet the expectations of this new generation. For example, the tokenization of a fund’s shares makes it possible to adapt the management methods for these shares to these new consumers, while meeting their expectations, both financial and societal.

New modes of consumption

Some players, such as neo-banks, have shown that consumer habits in the financial world have changed. Investments in stocks are now made from mobile or internet platforms offered directly by neo-banks that are replacing traditional distributors.

It is difficult to envision such platforms for funds since the subscription / redemption processes are less standardized and more manual than for equities. However, new investors favor user experience in their consumption of financial services. This experience tends to be quite poor for funds that are not part of their bank’s distribution network.

The automation of manual and non-standardized processes through the use of smart contracts will allow the creation of new ways of investing. Investors will be able to take advantage of fully integrated platforms, through a mobile version or on the Internet, allowing them to place subscription orders for fund shares as if they were classic stocks.

Facilitate the management and ownership of this new type of asset

The different financial services giants have accustomed investors to receive deliveries in record time: a large part of orders are delivered the same day. The blockchain can extend this speed to the acquisition of fund shares. Investors will soon be able to send orders that can be honored during the day thanks to the deployment of blockchain platforms and the opening of secondary markets.

These platforms will be able to both connect to conventional distribution networks and those of neo-banks by offering a better user experience. Why not also consider the possible emergence of new marketplaces for funds offering access to different management companies for consumers looking for investment opportunities.

Reinforced transparency for both parties

One of the interests of blockchain technology is that it allows better information sharing. This results in better visibility of the assets, their characteristics and their ecological footprints. Because the funds will also have better visibility of their end investors, this will enable better governance thanks to better communication between the two ends of the chain. The blockchain will provide more transparency for real estate funds; both for funds and for unit holders.

At a time of socially responsible investment or ESG boom, such transparency is desired by consumers wanting to have an impact. This will allow management companies performing in these sectors to easily promote their range of products to these investors.

The blockchain will bring real estate funds into the savings habits of new generations

The various characteristics of blockchain technology make it possible to make shares of real estate funds fluid and more open. The shares can be obtained by the use of mobile applications or directly on the Internet through a completely digital experience. In short, it is the user experience that will be significantly modified and simplified by the blockchain. On the other side of the chain, the efficiency and experience of the management company will also be improved. By minimizing manual processes and the need to reconcile flows, they will be able to focus on different commitments, the main one being performance.