With the realistic potential of blockchain technology to significantly streamline existing systems in the financial services industry, big banks and other large companies are showing their support by investing in the technology. Axoni, a blockchain tech company, recently raised $18 million in a Series A financing round, bringing their total funding-to-date over $20 million. Several major financial institutions participated in the round including Wells Fargo, Goldman Sachs, J.P. Morgan, Thomson Reuters, and more.
Axoni is a leading provider of blockchain-based solutions for the financial industry. They’re actively working with businesses to integrate distributed ledger technologies into their current dealings. Axoni has already successfully completed tests of a blockchain-based system meant to simplify equity swaps.
Equity swaps are financial contracts that allow parties to benefit from the returns of an equity security without needing to own shares of the security. The issue is most companies have their own proprietary systems for conducting these types of transactions, so custom connectivity must be engineered between counterparties. A distributed ledger would be able to connect different firms and allow them to interoperate with ease.
To execute complex equity swap transactions, parties enter into financial contracts, typically lasting up to a year. Since an equity swap can be affected by external factors like price fluctuations, Libor rates, and unexpected actions by businesses, firms have to update contracts manually, which always opens the door for consensus issues. Axoni is able to put important information on a shared, distributed ledger that all parties can agree on, and program a smart contract to address external factors. Relevant information is fed into the smart contract from Thomson Reuters, likely via an oracle. This model allows Axoni the ability to increase efficiency when dealing with equity swaps and reduce the possibility of disputes or discrepancies, all through blockchain technology.
With their ability to streamline existing systems, reduce reconciliation costs, and bring more transparency to financial markets, Axoni is in a great position to promote the benefits of blockchain technology. Greg Schvey, CEO of Axoni, said:
We are delighted to have strategic support from global leaders in financial services. The changes already underway based on distributed ledger technology will have a profoundly positive impact on the industry. Axoni is excited to help drive that progress alongside our investors and clients.
Axoni is showing the finance industry the benefits of the blockchain through real-world applications and successful deployments of the blockchain tech. With the support from some of the biggest players in the finance industry, the company could lead the fintech blockchain charge and is certainly proving to be a company worth watching. Once the big guys embrace blockchain technology, everyone else may fall in line.