Author: Gan Jia Ci
CEO of Swiss multinational financial services giant UBS Group AG Sergio Ermotti claims that blockchain technology is crucial to the financial services industry.
During an interview with CNBC on 18 June, Ermotti commented, “It’s almost a must. 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.”
According to him, blockchain will transform the industry’s cost base. However, he emphasised that the transformation will not happen “tomorrow”. Rather, he predicts the change to occur in five to ten years. Prioritising the application of blockchain will also allow UBS to be competitive.
“Our industry will continue to be under pressure, in terms of gross margins. It’s no doubt,” Ermotti stated.
“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.”
Despite asserting the importance of blockchain’s potential, Ermotti still does not believe in Bitcoin, or any other cryptocurrency for that matter. Last October, he told CNBC that he was “not necessarily” a cryptocurrency believer. UBS also openly stated that cryptocurrencies like Bitcoin are in a “speculative bubble” and the odds of them becoming mainstream currencies are not high.
UBS recently partnered up with several banks in a consortium to develop a blockchain-based global trade finance platform, Batavia. Batavia is built on the IBM Blockchain Platform. The banks involved in the partnership include UBS, Bank of Montreal (BMO), Commerzbank, Erste Group ad CaixaBank. The pilot transaction was recently launched in April that included trading of cars from Germany to Spain and textile raw materials from Austria to Spain for furniture production.