Franklin Templeton CEO Highlights Cost Benefits of Tokenisation, Says All ETFs Will Be on Blockchain

The CEO of asset manager Franklin Templeton, Jenny Johnson, has given blockchain technology a huge vote of confidence, telling Bloomberg she believes it’s a very efficient technology which allows for significant cost savings and opens up a large range of new investment opportunities. 

Johnson also said she believes all ETFs and mutual funds will eventually take advantage of blockchain technology.

Related: BlackRock Predicts Increase in BTC ETF Fund Flows, Sets Sights on Sovereign Wealth and Pension Funds 

Franklin Templeton’s Blockchain Experiment

During an interview with Bloomberg’s David Westland, Johnson was very clear about her position on blockchain, saying “I am a huge fan of blockchain.”

Johnson said she believes blockchain could be a revolutionary technology for the finance industry:

We think it (blockchain technology) is gonna open up a lot of new investment opportunities, and honestly, eventually I think all ETFs and mutual funds are all gonna be on blockchain.

Jenny Johnson, Franklin Templeton CEO

She described an internal experiment Franklin Templeton ran where the firm compared its regular record-keeping system to a blockchain based system over a period of six to eight months to assess if blockchain could provide any benefits. According to Johnson the firm was “astonished by how much less costly it was to run it on blockchain.”

Traditional bookkeeping systems require that each party reconcile every transaction with the other parties, adding significant complexity and increasing the risk of mistakes. But Johnson says with blockchain everyone has access to the single source of truth for every transaction, removing the need for reconciliation and reducing costs:

There’s a huge cost in financial services to reconciling data between systems, once you reconcile it within your own firm, you’ve then got to reconcile it with your counterparty — in the case of blockchain there’s only one source of truth, that transaction happens and everybody has the source of truth. And so that drives out a lot of costs.

Jenny Johnson, Franklin Templeton CEO

Blockchain Creates New Investment Opportunities 

Johnson also pointed to the new classes of investment products blockchain technology allows for, mentioning a specific use case where Rihanna issued an NFT that allowed holders to receive a small royalty every time the song link to the token is streamed — she referred to this as an example of a “cultural asset”.

Related: Franklin Templeton Sees ‘Renaissance’ in Bitcoin Activity, Credits Ordinals for Innovation Surge 

Despite all the positives of blockchain, Johnson is also aware the crypto market can be particularly risky, especially for new investors, warning that “It is a challenge and there are definitely some things where you can step on some land mines.”