Jenny Johnson, president and CEO of Franklin Templeton, recently underscored the transformative potential of blockchain technology and generative artificial intelligence (AI) during an interview at the 27th Annual Milken Institute Global Conference (held May 5-8, 2024 in Los Angeles, California). With $1.6 trillion in assets under management, Franklin Templeton is keenly exploring innovative technologies to enhance efficiency and reduce operational costs.
Franklin Resources, Inc. (NYSE: BEN), also known as Franklin Templeton, is a premier global investment management organization renowned for its mutual funds and investment services. Founded in New York in 1947 by Rupert H. Johnson, Sr., the company was named in honor of American polymath Benjamin Franklin, reflecting its commitment to prudent and conservative investment practices.
Over the years, Franklin Templeton has evolved into one of the leading asset managers globally, providing a broad array of investment and advisory services to individuals, institutions, and financial professionals across multiple countries. The company offers diverse solutions spanning various asset classes, including equities, fixed income, alternatives, and multi-asset strategies.
According to a report by Cointelegraph, Johnson highlighted a recent experiment in which the firm processed account records using traditional methods alongside blockchain technology over a six—to eight-month period. The blockchain approach emerged as significantly more cost-effective, bolstering Johnson’s belief in the technology’s capacity to streamline financial processes.
Johnson predicts a major shift in how investment products are managed, suggesting that all ETFs and mutual funds could eventually operate on blockchain platforms:
“It’s a very efficient technology, and we think it’s going to open up a lot of new investment opportunities. And, honestly, eventually, I think ETF and mutual funds are all going to be on blockchain.“
This transition, she notes, is largely driven by the need to reduce the substantial costs associated with data verification across disparate systems. Blockchain, with its inherent transparency and efficiency, could effectively address these challenges.
Johnson also delved into the potential of tokenization, citing the example of pop icon Rihanna, who released 300 non-fungible tokens (NFTs) offering a small percentage of royalties from one of her songs through a smart contract. This move exemplifies the innovative ways blockchain can facilitate new investment opportunities and democratize access to financial markets.
In addition to blockchain, Johnson addressed the role of generative AI in finance. While recognizing its benefits, she cautioned about its limitations, humorously comparing it to a student excelling in English but failing in math. Despite these challenges, Franklin Templeton is actively incorporating AI technologies, including a collaboration with Microsoft to develop an AI-driven sales assistant.
Back in January, at the Fortune Global Forum in Abu Dhabi, Johnson engaged in a discussion with Anna Tutova, CEO of Coinstelegram, regarding the company’s evolution and its ventures into the realms of blockchain and cryptocurrency.
During the conversation, Johnson elaborated on Franklin Templeton’s engagement with blockchain technology, specifically mentioning the company’s application for a Franklin Bitcoin ETF. She clarified the distinction between Bitcoin and blockchain, viewing the latter as a tool to democratize access to private markets and enhance transactional efficiencies. Johnson pointed out that blockchain technology has the potential to transform nontraditional asset classes and boost the efficiency of existing financial products. She highlighted Franklin Templeton’s initiatives, such as the development of a tokenized money-market fund and a blockchain-based shareholder recordkeeping system, which aim to mitigate fraud and reduce latency in financial transactions.
Johnson, an investor in cryptocurrencies like Bitcoin, Ether, SushiSwap, and Uniswap, considers these holdings a minor part of her portfolio. She also discussed Franklin Templeton’s readiness to introduce blockchain or crypto-related products, dependent on the decisions made by retirement plan fiduciaries. Johnson emphasized blockchain’s role in facilitating active, risk-adjusted investment decisions. She noted the success of the company’s U.S. tokenized money-market fund, which has garnered over $270 million in inflows, and expressed optimism about future opportunities as blockchain technology continues to evolve. While acknowledging the potential in specific NFT investments, she urged caution and drew parallels between some aspects of the NFT market and art valuation.
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