Bain and Company: Tokenization Can Unlock a $400B Yearly Alternative Investment Opportunity

A report issued in December by Bain and Company and JPMorgan executives recognized the impact that tokenization can have in bringing alternative investments (such as private equity, private credit, real estate, and hedge funds) to individual investors. The document states that this can be a $400 billion opportunity for players in the ecosystem implementing these technologies.

Bain and Company Believes Tokenization of Alternative Investments Can Bring Revenue Opportunities of $400B

Real World Asset (RWA) tokenization technology is starting to be considered a useful tool in financial markets. A report issued in December by JPMorgan and Bain and Company analysts remarks on the significance of tokenization tech for reaching individual investors seeking alternative investments, like private equity, private credit, real estate, and hedge funds.

The report discusses that alternative investments are seldom offered to individual investors due to their sophisticated traits and cumbersome management, traditionally only used to target institutions. However, tokenizing these alternatives can help automate and simplify the management of these investments, benefiting individuals and institutions in a way that current solutions cannot.

According to Bain and Company:

Tokenization and blockchain offer a potential solution to the challenges of fragmented, nonstandardized processes across multiple participants in the alternative value chain.

This would allow the alternative investments ecosystem to grow by $400 billion, adding more value to each part of the chain in different ways. Fund managers would increase their income by increasing their user base, reaching more investors due to this simplification of processes. Wealth managers would also increase their revenue due to their arrangements with fund managers.

Finally, wholesale platforms would increase their assets under management by differentiating from the rest by adapting these technologies to their solutions.

However, these analysts do not believe that tokenization will lead to a retail revolution as it is promised by several actors in the Web3 field. Instead, they predict that the effect of tokenization will allow investment firms to simplify the management of these alternatives for high-net-worth individuals.

What do you think about tokenization and its $400 billion opportunity for alternative investments? Tell us in the comments section below.