Blockchain will become a ‘must have’ in the banking industry, UBS chief says
UBS, Switzerland’s biggest bank, believes blockchain will become an essential tool in the global banking industry, chief executive Sergio Ermotti said in an interview on CNBC on Monday night.
While the investment banker remained sceptical about cryptocurrenies, he considered that the technology behind bitcoin, ethereum and other digital assets “almost a must”.
He said: “The freeing up of resources to become more efficient will come through technology and blockchain is a great way to allow us to reduce costs.”
Many banks have begun the process of updating legacy IT systems, introducing faster technology and third-party providers who offer utility-like services that can reproduce and automate middle- and back-office functions for multiple bank industry clients, thereby slashing costs.
Ermotti said the financial services industry continued to come under pressure in terms of gross margins. Low interest rates around the world, greater competition from established and challenger banks and rising costs have cut profit margins dramatically in the past decade.
“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,” Ermotti added.
Blockchain and global trade
UBS has entered a blockchain alliance called Batavia along with IBM and several other banks, including Commerzbank of Germany and Spain’s CaixaBank.
Batavia’s main offering so far is a blockchain-based global trade finance platform that has performed some preliminary transactions in April – shipping cars from Germany to Spain and textiles from Austria to Spain.
Ermotti said he was convinced that blockchain technology would be “as crucial and disruptive” in changing industry practices as new regulatory frameworks were a decade ago.