Sergio Ermotti, the CEO of Swiss UBS Group, has told CNBC that blockchain is going to be absolutely essential for the financial services industry.
He is convinced that the underlying technology of cryptocurrencies will allow “[the] freeing up of resources to become more efficient,” adding that “[it] is a great way to allow us to… reduce costs.” As a result, according to his statements, we will see a dramatic change in banks’ cost base within five to 10 years. His own bank, UBS< will be integrating blockchain technology to ensure that it stays competitive. He said: “Our industry will continue to be under pressure, in terms of gross margins. It’s no doubt. The only way you can stay relevant is not only by being strong in terms of capital, in terms of products, the quality of the people you have, advice you give to clients. You need also to be able to price it correctly.”
UBS is part of a blockchain partnership called Batavia, which includes IBM, Bank of Montreal, CaixaBank, Commerz Bank and Erste Group. The partners have been trialling the use of blockchain in transaction that include exporting cars from Germany to Spain and textiles from Austria to Spain.
UBS is primarily interested in the use of blockchain for business applications, such as the transactions mentioned above, but it remains sceptical about cryptocurrencies. Its chairman Axel Weber told reporters that UBS would not be offering its customers any means of trading in crypto and even called for more regulation, saying, “cryptocurrencies are often not transparent and, therefore, open to being abused.”
It seems that while the bigger banks are embracing the potential of blockchain technology and recognise that it can reduce transaction costs and increase the speed at which goods are sent between countries, they are still nervous when it comes to the currencies that are created on the blockchain.