Blockchain in Fixed Income Markets (Part 2 - Front Office, Middle Office, Back Office)

Hi All,

Welcome Back.

Check out Part 1 of this series here.

In this post, we'll go through the high level teams within a bank. Understanding the current framework of the institution and responsibilities each group has is important for highlighting what elements are required and where improvements with blockchain will come into play. The framework below will come back in later posts as we begin deep diving into each piece and begin replacing each component with a proposed blockchain replacement.

Some of the sections will seem obvious and ripe for replacement while others will be less intuitive for a novice in the banking world.

Front Office

The "Front Office" is the revenue generating divisions of the bank. Traders, salesman and brokers reside here with the goal of buying and selling securities for profit or to earn commission for themselves and the company.

Middle Office

The "Middle Office" holds ancillary operations which can be considered "revenue neutral". These roles include risk managers checking to ensure money is not lost, compliance and regulators ensuring fines or penalties are not lurking for unscrupulous activities and account management services with 3rd party vendors.

Back Office

The "Back Office" is considered a necessary cost to the bank. This area is most ripe for automation and improvements. Key tasks include processing payments and cash movements for clients and the bank, maintaining records for ownership of securities and perform reconciliations between systems to ensure data is accurate.

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