Digital assets have become a key talking point for fintech and incumbent banking organisations across the globe. With finance business leaders taking note, the paradigm of digital assets has evolved rapidly over the past decade, gaining thrust through the propagation of new use cases. In fact, finance leaders believe that if the popularity of digital assets continues to grow, so will the demand for cryptocurrencies, non-fungible tokens (NFTs), tokenised securities and other aspects of decentralised finance (DeFi) and distributed ledger technology.
Sanjiv Bajaj, Chairman & Managing Director, Bajaj Finserv, and one of India’s most celebrated fintech leaders, says, “Digitalisation and decentralised finance is becoming more and more relevant worldwide. And the more decentralised financing gets, the less a monolithic environment (like a bank) will be relevant in the future. We are using blockchain technology to improve customer service; however, it is closely monitored, and the company is keeping a watch on regulatory guidance regarding the usage of cryptocurrency in the country. There is also clearly a very strong need and a role for digital currency. Adopting digital currency – issued and monitored by the central bank – can take the economy to the next level.”
It is no wonder that fintech industry leaders are betting big on digital assets, realising the growth opportunities they pose in leveraging data to the fullest and catering to consumer demand. However, with technology proliferation happening faster than the blink of an eye, having robust digital asset management protocols has become paramount. Here is a glimpse at some best practices fintech leaders can use to approach digital asset management (DAM) more cohesively.
Keep an eye on security and build the right mesh with care
Top fintech leaders value security and safety as the most important parameter for digital asset management. The chosen DAM software requires sophisticated techniques to back up data reliably, encrypt it to prevent misuse or leaks, and safeguard it on-premise, on a cloud storage facility and in hybrid models for remote access and multi-stakeholder sharing. Flexible and scalable performance is key, as is the software’s ability to recover such assets and only allow permissible entities to access them.
In addition to a secure storage infrastructure, DAM should target fast digital asset transfers to keep pace with business needs. This efficiency directly affects the competence of digital assets being leveraged by fintech.
Focus on integrated solutions with traditional assets and services
Digital assets cannot be brought into the mainstream without the right infrastructure for collaboration. To facilitate this, the DAM process needs to allow fintech to use such assets for trading and transacting, preventing fraud and reporting to investors and stakeholders seamlessly and robustly. Thus, the supporting architecture needs to offer custody while decreasing the possibility of risk to promote integration instead of separate solutions for every new innovation.
Some of the vital areas that top fintech leaders focus on within such interactions include risk management, transparency, comprehensive support and resilience to deliver value across all touchpoints of digital assets, from lending and trading to safekeeping and management.
Automate relevant workflows to improve the efficiency of asset handling
Sensitive and critical digital assets require an equally precise workflow that leverages technology to prevent data compromise and maximise integration and speed. Thus, the DAM process demands AI-powered automation that maps all digital assets, allocates a risk rating to each, identifies their availability with regard to regulatory and governance controls and implements a multi-layer plan for usage and accessibility.
Smart contracts are gaining popularity at the moment and can be used to create rules for storing and exchanging value across this ecosystem.
Don’t be shy about building a tailored DAM model from scratch
Since DAM for banking and finance organisations unites risk management and regulatory compliance along with storing, sharing and controlling the flow of data and information, fintech industry leaders should not hesitate to create unique asset management solutions for their own use.
By outlining their goals, critical needs and operational strategies, entrepreneurs can design their physical and virtual infrastructure and the right set of capabilities and assimilations. A sound data collection approach and a complementing data presentation module can help fintech create a DAM system that checks all the boxes, from regulatory limits to controlled navigation of digital assets. With regular audits to assess this system’s effectiveness, further improvements and capabilities can easily be incorporated.
Digital asset management is the only way unique digital assets can be methodically harnessed to offer faster, cheaper, inclusive and more empowering financial services to citizens worldwide. The way forward is to leverage technology like AI, ML and blockchain to optimise their value while minimising the risk of data loss or security breaches.
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