FNZ, the global wealth management platform, has begun the roll out of FNZ ChainClear, its blockchain-based fund trading and settlement solution, to the South African funds market.
The solution – which is being deployed in partnership with FinSwitch, following an agreement reached in May 2020 – will support the entire South African fund management industry and streamline fund operations across trading, settlement and reconciliation activities.

It achieves this outcome by replacing slow, file-based batch processing of fund administration activities, with a single real-time, automated end-to-end solution. Using blockchain or distributed ledger technology, multiple copies of fund ownership records held by each industry participant and manually synchronised, are replaced with a single “source of truth”, securely federated across all participants.

This lowers costs and improves access for South African investors, as well as reducing operational delays and errors that give rise to risk.

Alongside these benefits, FNZ ChainClear provides an improved digital experience for users, including more powerful tools to dynamically manage business relationships and increase the efficiency of fund distribution.

FinSwitch and FNZ are now using blockchain technologies to process hundreds of thousands of trades and other transactions on behalf of 140 South African financial institutions every week, in a parallel processing phase alongside the existing system. Once fully deployed, this will allow legacy market infrastructure to be retired.

Hugh Evans, Managing Director at FNZ South Africa, said: “This development takes the South African market to the forefront of managed fund servicing globally. It reflects our strong commitment to and conviction in the long-term growth potential of the South African investment industry.

Our partnership with FinSwitch is a key part of our strategy in South Africa and we’re delighted to have reached this key milestone in just 10 months.

Jack White, Head of FNZ ChainClear Proposition at FNZ, said: “Blockchain and distributed ledger technologies provide us with a huge opportunity to make the process of fund administration and distribution more efficient and cost-effective for all participants. This marks a significant milestone in the development of FNZ ChainClear and demonstrates that we are taking that opportunity, as we seek to deploy the solution more widely across the markets in which we operate.”

Nick Baikoff, Managing Director at FinSwitch, commented: “The FinSwitch blockchain, powered by FNZ, presents an opportunity to fundamentally re-architect the existing operational topology of the Collective Investment Scheme industry in a way that brings about dramatic improvements in efficiency and cost reduction for all stakeholders, ensuring that costs will be significantly reduced over time, making investments more affordable to the end investor.”