UBS Group AG CEO Sergio Ermotti on Wednesday endorsed blockchain technology, saying it is the future of traditional banking business. He argued that the technology creates trust for customers to entrust their assets to financial institutions.
The UBS boss told CNBC that the technology will help companies become more efficient. He believes this will reduce the cost of certain operations and free up resources for companies.
Financial institutions aim to integrate digital assets
CEO of UBS Bank says, “…Blockchain is the future of traditional banking business” pic.twitter.com/WJJWeXceiR
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Formerly Ermotti said The financial industry will continue to face pressure on gross margins without blockchain technology. He called on financial institutions to remain well-positioned by maintaining strong capital, products, quality of people and advice to clients.
Ermotti also believes that blockchain technology will become as important and disruptive as regulation was a decade ago. He argued that blockchain technology still needs to prove itself for many years. He also acknowledged that technology needs to: prove Its reliability in quantum computing.
“I believe that blockchain and that kind of technology is the future of traditional banking business, and that’s where it’s going to converge.”
–Sergio ErmottiCEO of UBS.
The UBS CEO has previously defended blockchain technology, saying he is more bullish on blockchain technology than digital assets. He said on Tuesday that the next phase of the World Bank’s operations will have Bitcoin and other digital assets at its core.
Ermotti believes that major financial institutions have moved on from discussing the relevance of cryptocurrencies to the traditional banking industry. He revealed that institutions are currently exploring ways to integrate Bitcoin securely and at scale as banks expand their custody and products related to cryptocurrencies.
Ermotti urges financial institutions to diversify investment assets
The UBS boss also revealed during a panel discussion at the World Economic Forum in Davos that diversification is now more important for investors in the industry. He believes this effort is critical because there are no safe assets.
Ermotti said asset prices are inevitably linked to geopolitical issues. He also recognized Given the strength of the US economy, it will be difficult for investors to diversify away from the US. His comments came after European pension fund Academia Carpension announced it would liquidate its holdings in U.S. bonds.
The UBS boss also said the current volatility affecting financial markets is far from over. He argued that recent trade tensions and geopolitical tensions have made it difficult for the market to remain unaffected.
Ermotti also noted that the tightening of U.S. monetary policy toward countries that resist President Trump’s Greenland purchase plan is returning investors’ risk tolerance to more typical levels. He believes the constant stream of uncertainty is starting to erode customer confidence, and said it could eventually become overwhelming for investors.
The UBS boss said investors are becoming more cautious amid current global tensions. He believes investors are holding cash and diversifying their investments to minimize risk. Ermotti also cautioned that it is difficult to find attractively valued assets in any category at the moment.
President Trump’s comments on Greenland on Tuesday sent major stock indexes lower, while gold and silver hit record highs. The president said he would discuss the Greenland issue with prominent world leaders this week.
Ermotti doesn’t believe things will return to normal anytime soon. He believes investor confidence will return if progress is made in resolving trade tensions and other issues involving Greenland and Ukraine.
The UBS CEO is also confident in the long-term benefits of artificial intelligence technology. However, Harvard professor Gita Gopinath argued that there is a difference between evaluating AI and the technology itself. Gopinath compared the technology to the dot-com era, noting that the scale of its impact on the global economy is now greater than it was then.
