Design for the next asset class

Asset tokenisation allows for the division of a real-world asset – e.g, a residential or commercial property – into tokens, which can be sold individually via the blockchain.

Background

An Irish investment firm approached us to research an emerging financial instrument known as Tokenised Assets.

These allow for the division of a real-world asset – e.g, a residential or commercial property – into tokens, which can be sold individually via the blockchain.

This new instrument is being regarded by some as the asset class of the future. Our client wanted us to investigate the customer experience that investors might have when trading in such a new market.

Key challenges

The market’s potential is marred by unpredictable onboarding, typically involving the connection of a crypto-wallet to the investor’s account at the point of entry.

The trading dynamic of this market is also radically different from more traditional markets. Decision making on which tokens to buy and sell involve criteria that investors will not be familiar with.

We have been granted permission to publish a snapshot of some of our recommendations.

Onboarding

  • Create familiarity by integrating a payment service such as PayPal at the initial account set-up.
  • Remove unnecessary friction and prevent the user having to leave their token marketplace to create a cryptocurrency wallet. Handle this “auto-magically” in the background.
  • Clarify the process with clear, jargon-free explanation and graphics.
  • Reduce anxiety by showing users they can withdraw their money back into Paypal, into a traditional, fiat currency.

 

Trading dynamic

  • Enable decision-making by filtering out irrelevant results, streamlining the investment process.
  • Highlight the differences where purchasing tokenised assets diverge from stocks and shares.
  • Grant flexibility by allowing the user to personalise their results across investment, fungibility and liquidity criteria.
  • Accommodate comparison to empower the investor to make an informed decision.

 

Industry Insight

“Once … issues about the functioning of the token economy can be answered, and there is progress on the regulatory front, tokenisation might become increasingly present across the financial industry”

Outcomes

Asset Tokenisation lowers the investment threshold for novice investors. It can be applied to typically illiquid assets (such as green energy, a work of art, or even a batch of whiskey), and utilises cutting-edge technology to provide a secure and truly global trading market.

This new market, however, is bedevilled by a fragmented and difficult user experience at present. Removing the inherent points of friction in that experience will prove to be a critical aspect of the market’s potential success.