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UBS Group CEO believes blockchain is key to boosting efficiency

UBS CEO Believes Blockchain is The Solution to Banking Woes

Reading Time: 2 minutes by on June 23, 2018 Altcoins, Bitcoin, Blockchain, Business, Commentary, News, Tech
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Sergio Ermotti, the Chief Executive Officer of Swiss investment bank UBS, believes that blockchain may be the answer to the banking industry’s woes.

UBS Chief Discusses Blockchain

When asked about blockchain technology in an interview with Finder on June 19, 2018, Emotti replied affirmatively. “It’s almost a must. The freeing up of resources to become more efficient will come through technology and blockchain is a great way [of reducing costs].”

Ermotti’s statement comes at a time when banks such as UBS are suffering from smaller margins and increased regulatory pressure. A boost to efficiency and market advantage – both of which are offered by blockchain – may go a long way to set the bank apart from others in the running.

He went on to state that he envisions distributed ledger technology will gradually overhaul the banking industry over the next decade or so. In the past few years, critics of cryptocurrencies have similarly argued that blockchain technology is far more likely to survive than any decentralized economy offered by bitcoin and other alternatives.

Blockchain and Banking

International remittance may be one of the most appropriate applications of blockchain in the banking industry. With the help of a distributed ledger, banks will be able to process cross-border transactions quicker than ever before.

Plenty of financial institutions around the world acknowledge these advantages, as is evident in the numerous trials launched for this exact application. After all, the very same technology has been utilized by cryptocurrencies to offer cheap and near-instantaneous transactions.

The trade finance sector presents another opportunity where banks can benefit from adopting the technology and is one where UBS has already made some advancements in. Not only will blockchain improve settlement time, but it will also increase transparency between all involved parties. This is an important consideration as the current trade finance system involves a lot of paperwork, which is hard to document and keep track of.

In February 2017, UBS announced a joint initiative to bring the advantages of blockchain technology to its trade finance business. Named Batavia, the platform is being developed in conjunction with IBM and several other banks. Earlier this year, the two companies also announced the completion of the platform’s first set of active transactions.

Blockchain: A Profitable Venture

The increasing popularity of the technology amongst traditional investors can also be inferred by the soaring stock prices of companies related to blockchain and distributed networks. In December 2017, the stock prices of a company named Long Island Iced Tea skyrocketed after it changed its name to Long Blockchain instead.

While the New York-based company saw a 289 percent rise in its share price to $6.91 almost immediately, it has since lost most of its value and is currently trading at around $0.42.

As a result of similar market behavior, many industry observers have drawn parallels between the current onslaught of blockchain applications and the dot-com bubble that popped around the turn of the century. Nevertheless, whether or not digital currencies will stay relevant in the distant future is perhaps not as important as the efficiency revolution they have introduced with blockchain technology.

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