UBS Invests Big in Blockchain Future

Global investment bank UBS is throwing its resources behind the blockchain's transformative potential, work a variety of applications like good bonds, cross border payment transactions on the distributed ledger and a digital illustration of physical currency.

In 2015 the bank opened associate innovation laboratory designed to explore however the blockchain may be employed by the money services sector and the way it'd disrupt ancient banking models. currently its analysis can be converted into reality.

UBS cluster chief in operation officer Axel Lehmann told The Australian money Review the blockchain may be "the next internet" in terms of its potential, however there have been still inquiries to be answered.

"We don't desire to shut our eyes and sit on prime of the event … however there square measure still lots of technical, security and legal queries that require to be addressed  before a public blockchain are often accomplished," he said.

"I assume ultimately technology, particularly blockchain technology, can have a broad impact, however it'll not revolutionise the globe in 2 to 3 years. However, in 5 to ten years the competitive landscape can have revolutionised."

Blockchain technology permits an inventory of transactions to be shared among variety of computers, instead of on a central server, and therefore the secure ledger updates in virtually time period across all the systems within the network. These networks are often either public or non-public.

Mr Lehmann's comments come back when UBS free a written report into however the blockchain may rework the arena, suggesting probably creations like good wallets that square measure connected to the blockchain and let individuals program their own portfolio managers.

Possible innovations

UBS suggests that within the future people's good wallets can trade on their owner's behalf, reading the news and creating trade choices supported market developments.

Mr Lehmann aforesaid associate invention like this is able to "go to the center of the blockchain" in terms of however it democratises the national economy, however such associate innovation would be years away.

In the nearer term, the bank is already developing good bonds supported the Ethereum blockchain network through good contracts, that square measure a series of laptop protocols that facilitate a self-executing contract.

The good bonds would cut out the intermediaries WHO square measure presently required to facilitate the dealings between issuers and investors, exchange them with code.

UBS has conjointly created the Utility Settlement Coin (USC), a illustration of physical currency supported digital currency, aboard a pool of different technology and money services – Clearmatics, BNY Mellon, Deutsche Bank, Santander and ICAP.

Mr Lehmann aforesaid there have been a number of samples of cryptocurrencies like bitcoin, except for widespread usage a digital currency required to be connected to "real central money".

"The USC can have a version for every major currency. as an example, the USD, AUD and franc, and therefore the USC can convert in real time to real financial institution cash," he said.

Another method that would be sped up considerably through the blockchain is transactions between parties at completely different banks. mister Lehmann aforesaid the bank has no immediate plans to switch the standard letter of credit with a blockchain-alternative, however that too may be on the cards.

"We can even verify victimization non-public blockchains as the way to optimise internal processes, with a well-defined captive audience," he said.

"We've trying into the way to use the blockchain for a client loyalty program with a definite range of shoppers."

A global effort

As well because the cluster that created the USC, UBS is an element of the R3 pool of economic firms that square measure together analysis and developing blockchain applications.

A number of Australian banks have conjointly joined R3 together with the Commonwealth Bank of Australia, National Australia Bank, Westpac Banking corporation and Macquarie.

ANZ, whereas not a part of R3, is additionally finance within the blockchain. it's joined major businesses like IBM, Intel and Wells Fargo in collaborating on a project referred to as "Hyperledger", wherever they share belongings and resources to develop their own blockchain.

Earlier this year ANZ cluster strategy govt manager St. Nicholas Groves aforesaid public ledgers would stay too risky for banks to use for the forseeable future.

Mr Lehmann believes widespread advantages won't be accomplished till banks will use the general public blockchain, however there square measure important barriers to the present and he says humans can invariably have a job to play.

"There's invariably a priority the globe is running out of labour and that i do not believe therein," he said.

"It's onerous to believe the human interaction are going to be utterly eliminated, it'll simply be a lot of in terms of service, desires and relationships.

Mr Lehmann aforesaid in 5 years there would be some tangible applications of the blockchain, however it'd take a decade before business models a lot of loosely had been reworked by digital technologies.

"We'll ne'er very have associate finish state. we'll get into a time of continuing transformation of companies and business processes," he said.

"Ultimately there'll be less repetitive processes that we'd like to execute. it'll be a national economy that is a lot of democratised, wherever people will take a lot of possession of their destiny, however relationship managers can still support and advise the client base."

source : www.afr.com