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- Chainlink’s Decentralized Oracle Networks (DONS) is reported to solve a major challenge in finance by facilitating the conversion of PDFs to JSON.
- Also, it overcomes the lack of a single source of truth problem in finance, which causes the repetition of the same data-cleaning effort.
Corporate actions were recently described by Swift’s Kelli West as “one of the most complex and costly unstructured data problems in the financial world.” The reason is that corporate events, which usually entail dividends, splits, mergers, stocks, etc, are shared in PDFs. This makes it unstructured, demanding millions of dollars to subject such data to management.
Existing Threat and the Mitigation by DONS
In a blog post, Chainlink (LINK) highlighted that this situation could pose a huge threat to security and confidentiality.
Managing this data is a messy process that costs institutions millions. It doesn’t have to. Large language models (LLMs) can easily extract critical data from these PDFs and press releases, reducing the messy manual work required. However, LLMs can sometimes hallucinate.
Fortunately, Chainlink’s Decentralized Oracle Networks (DONs) are reported to offer the best solution. According to experts, DONS ensure that data are requested from multiple LLMs. After this, a consensus is reached on its to address the issue of “hallucination”. To specifically ensure that corporate action events are shared in a structured format, DONS would ensure that data is shared in JSON, which is a machine-readable, structured format.
Analyzing Chainlink’s presentation on how it solves one of the biggest problems in finance, we observed that unstructured data is just one of the several problems in the industry. Another is the lack of a single source of truth. According to the post, this causes firms to repeat the same data-cleaning effort. Interestingly, this is done at each step as the data is moved to the brokers and investors from the public companies.
From PDFs to JSON: How Chainlink Is Solving One of the Biggest Problems in Finance.
At #Sibos 2024, Swift’s Kelli West described corporate actions as “one of the most complex and costly unstructured data problems in the financial world.” Our recent industry initiative is set to… vzpic.twitter.com/AaqLReq71G— Chainlink (@chainlink) November 10, 2024
How Chainlink Solves Data Issues in Finance
One of the methods to mitigate this challenge is to store structured data on blockchains. Not just that, the data has to be kept as a “unified golden” that could be accessible through Chainlink by everyone, including asset issuers and individual investors. In the long run, this would drastically reduce costs and unlock efficiencies as well as innovations by encouraging the automation of programmable actions that are based on corporate actions.
Commenting on this, Director of Digital Assets & Tokenization Strategy, Wellington Management Mark Garabedian, explained that the use of Artificial Intelligence (AI) and Chainlink Oracles could increase efficiency and encourage the seamless flow of data.
The complexity of corporate actions is a relevant and appropriate use case for the convergence of AI, oracles, and blockchain technology. By leveraging AI and Chainlink oracles to interpret, standardize, and deliver high-value unstructured data, we can dramatically reduce the manual processes required, enabling significant potential operational efficiency and cost reduction while ensuring that data flows through the system with the required levels of accuracy and transparency.
For the Group Head of Project & Transformation – Custody and Cash Clearing Business Unit at CACEIS Younes Ayouaz, his company fully supports the creation of a ‘golden source’ of blockchain-based information to ensure that corporate actions management is streamlined.
A shared data framework optimizes existing operational processes, reduces error rates, and prepares the ground for further innovation in the field of asset tokenization. Being at the cutting edge of technologies like AI, machine learning, and DLT is key to CACEIS’ future service development and our IT investment strategy reflects that.
At press time, LINK was trading at $14 after surging by 32% in the last 24 hours.
