Northern Trust, a major U.S. custody bank, is laying the foundations for large-scale adoption of its blockchain-based platform for private equity funds.
In partnership with “Big Four” accounting firm PwC, the bank introduced new tools Monday to give private equity fund auditors fast access to data stored on its private blockchain. Rather than waiting for periodic reports about actions taken by a fund manager, auditors will get the information almost immediately.
“We’ve taken and updated a process that was manual and happens periodically, and we’ve enabled that to be done on a daily basis in an automated manner,” said Northern Trust president of corporate and institutional services, Pete Cherecwich, in an interview with CoinDesk.
While only one Northern Trust client, the Swiss investment manager Unigestion, is currently using the blockchain platform that went live last year, Cherecwich positioned the new capabilities as a way to attract more users.
“Our strategy was to continue with the one customer and to continue to build out from a minimum viable product to a more robust application,” Cherecwich said, adding:
“What we’re doing now is finishing off the complete application, then we’ll start rolling out to our existing clients and new clients to the start of next year, or middle of this year.”
The potential user base for the blockchain platform is formidable, as Northern Trust administers $78 billion in private equity assets. Its clients in this line of business have included major players such as Blackstone and the Carlyle Group.
The private equities blockchain platform is now running the first enterprise-grade version of Hyperledger Fabric, and protected using hardware security modules enabled by the IBM Blockchain Platform.
The Northern Trust blockchain audit tools start off by giving auditors access to a specially designed node on the bank’s permissioned blockchain.
By using the software, auditors of a private equity fund will be able to see read-only files in near real-time when shares are bought and sold between general partners and limited partners, when investment firms call for capital promised by investors, and when capital gains are distributed…