Transforming Investor Relations With Blockchain

The expansion of the internet has caused enormous growth in investor’s relations. Fast forward to years later, and the storage of information has shifted from a paper model to a digital model. Even with these advancements, the investment industry is still affected by complicated administrative control. Other hassles that plague the industry include poor supervision of shareholder records and troubles in communication.
By eliminating negative excesses in the investment industry, blockchain technology made dealing with investors more open and trustworthy. With its improved method of processing and storing data, productive intercommunication, and secure method of transferring monetary value, the technology declares a strong universal solution to these problems.
Below are various ways in which blockchain technology has transformed investor’s relations:
  • The technology helped to improve communication and interaction with shareholders.
  • The technology increased transparency for investors.
  • Decentralized nature of the blockchain boosts investors’ confidence in its security.
  • Security records are easily accessible through the blockchain.
  • Blockchain technology creates digital voting platforms for shareholders.

The technology helped to improve communication and interaction with shareholders.

Traditional models don't make it easy to identify and reach the proper recipient of confidential shareholder details. Using blockchain technology in investment industries removes all useless third-party clearance requirements when transferring bonds and securities to the right owner. The technology is modeled in a way that allows for direct link and communication where external parties are not needed.
The technology provides extra insurance: by storing shares or bonds on the blockchain, such information can be communicated directly to the account that owns the shares.

The technology increased transparency for investors.

It has become common knowledge that blockchain technology protects data by its incryption. Nevertheless, even with such privacy, it is possible to keep transparency because the encrypted information is scattered and segmented across a shared ‘logbook’ that anyone with the correct password or private key can access.
As a result, there is less chance for fraudulent acts, as shareholders and investors have equal access to confidential details about company securities. Thus, it prevents people from tailoring data to their own benefit.

Decentralized nature of the blockchain boosts investors’ confidence in its security.

With blockchain technology, there is no unilateral storage, thanks to its segmented network. Information stored on a blockchain is not subject to the custody of a unilateral entity. This, coupled with blockchain’s foolproof records, makes the technology more dependant and less vulnerable to hackers and cyber attacks.
Many investors see this as a refreshing change from top financial institutions controlling mechanisms of investments. As a result, the blockchain platform has caught their attention and receives consistent input from them.

Securities records are easily accessible through the blockchain.

In traditional society, bonds and shares are not usually held by their holders but are placed in the custody of unique repositories that keep track of shares using a central ownership record. The fact that the blockchain surpasses this storage method has drawn the attention of radical investors who believe that the era of central repositories is over.
With this technology, all stockholders can directly access their digital shares with their private key.

Blockchain technology creates digital voting platforms for shareholders.

Before major decisions are made on the securities of a company, a meeting of shareholders and investors is usually held so all parties can exercise their right to contribute to the institution’s decision-making. This right is exercised via voting. Consequently, meetings may not be held until all shareholders can come together in a single place to vote, which can be inconvenient and even delay major processes for the company. For example, a company may want to decide on a pressing and urgent matter or hold its annual general meeting, but few major stockholders are absent and temporarily out of reach. In such cases, the meeting would have to be postponed.
Using blockchain technology can prevent such situations, as investors can vote on secure digital platforms, saving time and cutting out unnecessary procedures involved in shareholder voting. Experiments are currently being conducted to see how financial institutions and securities repositories can gear up private blockchain systems to implement e-voting platforms for investors and ensure they can exercise their voting rights in time, among other related features.
It should be duly noted that this does not mean the breakthroughs arising in investor dealings cannot be achieved without the blockchain technology. In fact, with the current rate of technology advancement, it is likely that some innovation would come up soon enough to fight with current difficulties. However, one should always remember a special attribute of the blockchain: It brought about the above breakthroughs in a manner that surpasses the traditional centralized system, with a technology that offers more value.