More details have emerged of UBS research initiatives into blockchain technology, the bank reportedly trialing a ‘smart-bond’, a ‘self-paying instrument’ with risk-free interest rates and automated payment streams.
The instrument leverages the technology of Bitcoin to cryptographically perform what would normally be the functions of an intermediary.
Earlier this year, UBS was among the first to announce its intentions to explore how blockchain technology can streamline transactions. The Swiss bank has opened a dedicated research lab at Canary Wharf-based FinTech accelerator space Level39, bringing together technology experts from the bank and wider FinTech community.
Several large banks have also announced similar research efforts, although finer details of their activities are yet to be disclosed.
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The latest development at UBS, reported by IFR Asia, emerged as Alex Batlin, the bank’s chief technology officer for innovation, expanded upon his vision during a talk at the IDX Derivatives Expo in London. He noted:
“Blockchain technologies can make banks more efficient – for example through instantaneous settlement rather than the days it takes at present, lower costs and lower operational risk.”
He also noted how the technology can significantly reduce operational costs, saying that “there is no middle or back office, and no registry.”
The potential for the technology to cut out sizeable quantities of manual labor comes at a time when banks are looking to significantly restructure their workforces to better align with their future strategies. Most recently, HSBC announced plans to axe 50,000 jobs, or 18.8% of its global workforce of 266,000, in the coming years.