From books to blockchain: how shareholder management’s evolved
Is it time to improve the way you deal with data?
For both public and privately-owned companies, shareholders are a vital asset. Keeping track of who owns a stake in your company isn’t just important; it’s a legal requirement in most markets. However, ensuring shareholder details are up-to-date can be a long-winded task.
Over time, businesses have looked for smarter, more efficient ways to manage their shareholder / stakeholder data, and this has changed the way in which organisations administrate and interact with members. The advent of new technologies has taken record-keeping from paper to digital power, and now blockchain is changing the share register game once again.
Let’s take a look at how managing shareholder data has evolved in recent years, and the benefits of using the latest technology to run your shareholder database….
A past history of paperwork
Turn back the clock to before the Millennium, and most companies kept paper registers to track their shareholder information. While this enabled vital details such as names, addresses and the number of shares owned to be recorded in a single place, the traditional approach to list-keeping was fraught with problems.
For starters, there were often only a few copies of the document, which meant it could be easily lost or misplaced. At the same time, because there were multiple versions floating around, information could be updated on one list and not another — leading to discrepancies between paperwork.
Additionally, the process of updating records was very time-consuming, and if a shareholder changed their details or sold their shares, it was difficult to find and update their record. This meant very few businesses had a true picture of exactly who their shareholders were and how to contact them.
Entering the era of electronic registration
To combat this problem, businesses started embracing technology developments, and a new era of registration began.
With the dot com boom came a new wave of B2B tech, which enabled companies to manage their data digitally. At a very basic level, company executives could access programmes like Excel and Word, and were able to migrate their share register into a virtual document that could be centrally shared and updated.
While this shift addressed some of the challenges associated with paper share registers, electronic documentation wasn’t invincible. Companies tracking shareholder information via word documents and spreadsheets could still create multiple versions, and without password protection anyone in the organisation could delete or amend data.
Some businesses went one step further and invested in software programmes to manage their lists. But many companies found these programmes prohibitively expensive to purchase, or they became costly to run as the number of users and shareholders grew. More often than not, these programmes also meant relying on a third party to manage or store shareholder data.
The brilliance of blockchain
The challenge of finding an affordable way to manage shareholder information centrally and securely has only been solved in the past couple of years, through the development of blockchain technology.
Blockchain enables the creation of decentralised lists, meaning no single user has overall authority. In practical terms, there cannot be a situation in which one person in the business owns the ‘true’ list, but others are still updating their own versions. Any changes are automatically synchronised to ensure accurate information can be accessed at all times.
Blockchain technology also automatically saves a full, tamper-proof version history of the share register, so that companies can look through historic versions without compromising the latest list.
A platform for customer communication
One of the most interesting things about blockchain-based share registers is not necessarily the technology itself but its accessibility, transparency, and the value-added benefits offered to businesses who are managing their shareholder data through a decentralised online platform.
Leading companies like WeOwn are offering their list management technology to businesses free of charge, with no surplus costs for adding new shareholders. This means that companies of all sizes have access to a better system for managing their data, and they can attract as many shareholders as they want without being penalised.
Moreover, these platforms are taking the wealth information being stored online and empower companies to use it for business development purposes. An example of this is shareholder email addresses; rather than just holding this information security, companies like WeOwn enable business executives to send communications to shareholders’ email accounts, so members feel more valued.
With a greater depth of data available, companies can also start analysing and reporting on exactly who their shareholders are, to build a profile of the type of investors they need to pursue. They can mine this data to reveal demographic groups within their community — based on age, gender, location and investment size — and create targeted communications to these particular groups. In this way, their share register moves beyond being an accurate record of share owners (the basic legal requirement) to a powerful CRM tool.
From legislative requirement to lucrative opportunity
Ultimately, it doesn’t matter what level of understanding companies have of blockchain technology; it is simply the best infrastructure for managing shareholder data effectively. However, it is important that businesses appreciate the financial, administrative and relationship-building differences between investing in a standard piece of electronic shareholder management software, and a flexible, free-to-access blockchain platform that turns required information into a lucrative data source and a basis for valuable shareholder engagement activities.
The industry has come a long way since the days of paper, but the potential of blockchain for share registration is only just starting to be realised. Companies willing to embrace this technology and adopt early will reap the benefits quickest, and secure a competitive advantage that will enable them to grow much quicker than their rivals.
Discover WeOwn’s Decentralised Stakeholder Register, built on the blockchain.