While the transition to on-chain structures is accelerating in the asset management sector, evaluations that this transformation puts pressure on the income items of traditional finance stand out. Speaking at the Proof of Talk summit held in Paris, Franklin Templeton CEO Jenny Johnson said that behind the reservations about the spread of decentralized networks is the perception of a direct threat to existing business models.
Traditional revenue model debate
Johnson, who heads Franklin Templeton, which manages $1.74 trillion in assets, stated that the main reason why large financial institutions are cautious about public blockchain networks is their profitability structure. According to Johnson, institutions that play an intermediary role in transactions may face the risk of losing income due to the efficiency created by the new architecture.
Jenny Johnson stated that this technology threatens many business models that exist today in traditional finance, and that the hesitation seen in the sector is largely due to this concern.
Johnson stated that if a blockchain can instantly complete the exchange via a smart contract, the space for large banks to collect transaction fees as a third-party intermediary will shrink. In this context, he emphasized that public networks have become not only a technical innovation but also an element that reshapes revenue sharing.
Mini dictionary: A smart contract is a blockchain-based code structure that automatically executes transactions when certain conditions are met. The custodian is the authorized financial institution that keeps investor assets safely and provides operational protection.
Cost difference and Benji example
While crypto-focused networks have been advocating open architecture for a long time, it is reported that traditional financial institutions have started to turn to public networks due to the advantage in transaction costs. At this point, Johnson cited the results obtained from Franklin Templeton’s tokenized money market fund Benji as an example. As a well-established asset management company operating on a global scale, Franklin Templeton has recently been focusing more on digital asset products.
According to the data shared by Johnson, the cost per transaction for 50 thousand transactions in the old system was approximately $1.30. He said the same operation was run on the Stellar blockchain for about $1.13 per transaction. This difference appears to strengthen the argument for efficiency in corporate use of public networks.
| System | Number of transactions | Cost per transaction |
|---|---|---|
| old system | 50,000 | $1.30 |
| Stellar blockchain | 50,000 | $1.13 |
Johnson stated that the cost has decreased significantly compared to the old system, and that working on the Stellar blockchain is cheaper for the company.
MoonPay partnership and emphasis on custody
Johnson’s emphasis on Benji’s example coincided with the company announcing a new step in its digital asset strategy. As part of its partnership with MoonPay, the Wall Street-based asset manager has paved the way for institutional investors to switch between stablecoins and the company’s tokenized money market fund with an on-chain workflow.
However, Johnson also stated that not all financial intermediation roles will disappear. Stating that individuals and companies need a reliable third party in daily life, Johnson noted that keeping assets directly in personal wallets or physical safes may not be preferred for everyone, so custody institutions and banks will continue to function in the future.
