UBS COO: Blockchain is not a threat to the banking industry, we plan to increase investment in China

The Union Bank of Switzerland (UBS) plans to increase its blockchain investment in China and expand its influence in the country.

UBS has opened a new business center in Wuxi, Shanghai Daily reported, with plans to recruit 200 employees. UBS said it plans to expand the business center to 500 employees in the next three years and increase its business with China.

UBS Chief Operating Officer Axel Lehmann said in an interview that they are developing a new settlement system aimed at improving work efficiency.

Like many of its peers, UBS has spent the past two years testing applications for trade settlement and trade finance. The bank is also a member of the R3 distributed ledger consortium.

The following is an excerpt from an exclusive interview with Shanghai Daily.

Q: In today’s technological age, what does UBS think about the application of blockchain?

A: UBS believes that blockchain technology has great potential, but some meaningful and successful business use cases may not appear for several years. In the next 5 to 10 years, after the public chain is officially deployed, you will see enterprises and government agencies adopt blockchain for information sharing. But in-depth, it may take longer for ordinary people to benefit from blockchain.

Q: Are you aware of any successful blockchain banking projects?

A: We have launched a number of pilot projects, including the use of the technology to issue ‘smart bonds’, which provide a simple and transparent way to raise funds; and the ‘loyalty payments’ project, which allows customers to make online payments in cryptocurrencies based on loyalty points.

Recently, we have also cooperated with three large banks and many technology companies to jointly develop "settlement coins". This settlement coin can convert digital currencies such as Bitcoin into central bank currencies in real time, including US dollars, Swiss francs, and RMB.

Q: The emergence of blockchain, the underlying technology of Bitcoin, is intended to eliminate the banking industry, but currently the world's top banks are competing to research this technology. Some people say that banks are trying to monopolize this technology. What do you think of this view?

A: I don't think so. You can say that blockchain technology has taken over part of the value chain of banks. On the other hand, the arrival of this technology has brought a great opportunity to the banking industry and the financial system, an opportunity to make our system more efficient and more secure. Therefore, blockchain technology is very important to us. It can reflect our value and is an area that is worth investing in. That's why we choose to work with internal innovation labs and external public architectures to share our information and data.