As with any emerging industry, skepticism has been on the rise when it comes to blockchain technology and cryptocurrencies, as well. With some critics arguing that the industry is not as important as its proponents claim it to be, to downright saying it is bound to fail, there are those who, on the other hand, believe blockchain technology, the technology behind crypto market, is very much necessary in today’s financial world and is here to stay.
Among those optimists is UBS Group CEO Sergio Ermotti.
According to Sergio bitcoin might vanish from the world scene, the blockchain technology will remain to be very important in the financial industry. It might even be crucial for financial institutions that wish to remain competitive in the next five to 10 years, he believes.
Blockchain technology is a decentralized system that enables data to be kept within a network of devices around the world rather than in one single location.
Financial institutions such as UBS have to find a way to cut costs without hurting quality.
Ermotti’s opinion is that blockchain technology can considerably upgrade efficiencies and reduce costs in the financial industry.
“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],” he said.
The 58-year old Swiss banker said that price is the most important element here, as ever-stricter regulations and increasing competition constantly endanger profits in the finance industry.
Nevertheless, financial institutions should not resort to raising prices to address this problem. A more effective way would be to find efficiency benefits somewhere else.
“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,” he said.
Ermotti believes that in the next five to ten years, the industry will slowly but surely transform and the existing systems will become automated. This example is evident in the case of theBatavia blockchain system, whose development is the result of work of a consortium of banks and tech companies including UBS.
It has become evident that blockchain technology can be implemented in cross-border payments, so it has the potential to be very much useful in the banking sector.
UBS was founded in 1862 as the Bank in Winterthur. During the 1890s, the Swiss Bank Corporation (SBC) was founded, resulting in the establishment of a private banking syndicate that overgrew with the help of Switzerland’s international neutrality. In 1912, the Bank of Winterthur merged with Toggenburger Bank and formed the Union Bank of Switzerland (UBS), which also grew even more rapidly thanks to the Banking Law of 1934 which codified Swiss banking secrecy that Switzerland is now famous (or notorious, depends on the viewpoint) for. The SBC and UBS merged in 1998, forming one company that is now known only as “UBS”.