Blockchain Technology
Blockchain 'Almost A Must' for Business: UBS CEO
By Shobhit Seth | June 19, 2018 — 10:05 AM EDT
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The chief executive officer of the Swiss banking and financial services giant UBS Group AG (UBS), Sergio Ermotti, believes that the blockchain technology underlying the cryptocurrencies is "definitely an opportunity" in the long term, according to CNBC. (See also: Blockchain Is IBM's 'Best Hope for Recovery': UBS.)
Blockchain: A Must Have
Ermotti sees major benefits in the use of blockchain technology as it offers higher efficiency and allows for significant reduction in costs for certain operations and processes. "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," said Ermotti. He's convinced that the path-breaking blockchain and distributed ledger technology "will be as crucial and disruptive and changing as regulation was in the last 10 years." (See also: Blockchain Technology to Revolutionize Traditional Banking.)
The Switzerland-based global financial company is currently involved in the development of a blockchain-based global trade finance platform called Batavia. The joint venture has participants from other major banks like Bank of Montreal (BMO), CaixaBank, Commerzbank and Erste Group, as well as from technology giant International Business Machines Corp. (IBM). In April this year, UBS successfully conducted its first live cross-border transactions involving corporate clients using the Batavia platform. It involved carrying out the full cycle of trades, including the automatic generation of agreements and execution of the payments. The process was performed using the power of smart contracts, and the necessary transactions were recorded on a blockchain. (See also: UBS to Test Blockchain Settlement System.)
Cryptocurrency Skepticism Continues
Despite his confidence in the blockchain technology, the CEO is not convinced about cryptocurrencies like bitcoin, which are based on blockchain. Last October, Ermotti mentioned that he was "not necessarily" a believer in cryptocurrencies. Around the same time, UBS had warned that cryptocurrencies like bitcoin are in a "speculative bubble," and it is "highly doubtful" that these will ever become mainstream currencies. It was followed by another warning issued in January for a big decline in bitcoin valuations, which then turned out to be true. (See also: UBS Chair Warns of 'Massive' Bitcoin Downfall.)
During his talk with CNBC, Ermotti also expressed concerns about the problems looming large as a result of ongoing rift between U.S. and China trade developments, and believes that “things are going to get out of control.” (See also: US Tech Firms' $150B China Revenue at Risk in Trade War.)
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