UBS, the largest bank in Switzerland which operates in over 50 countries, has announced that it will open a new technology lab in London. The new lab is being established with the express purpose of exploring and researching how blockchain technology could be used in financial services.
The blockchain technology lab, set to open as soon as this month, will be housed in HighGrowth:42 of Canary Wharf Group’s technology accelerator space, Level39. The lab will be led by a team of financial technology specialists who will investigate Blockchain and other Distributed Ledger technologies along with Smart Contracts and work on potential new applications in its lab.
“We are excited to be the first global bank to be part of the innovation ecosystem at Level39, Europe’s largest FinTech incubator and accelerator space. By establishing a dedicated innovation lab at Level 39 we are moving away from a purely in-house innovation strategy, optimising collaboration opportunities with the growing FinTech business, start-up and investor community in an open and transparent way. Our innovation lab at Level39 will provide a unique platform to explore emerging technologies such as Blockchain and crypto-currencies, and to understand the potential impact for the industry”
- Oliver Bussmann, Group CIO, UBS
London has been taking a lead in Bitcoin and blockchain-based technologies, adopting a friendlier regulatory stance than its counterpart in New York. In fact, the UK government has committed funds of up to £10 million to support research in this area. There are several Bitcoin and cryptocurrency related startups growing in London. Being a financial and technology hub in Europe, the startups have access to both financial and technology capital from not just the UK but the whole of Europe.
A recent report by Accenture on the FinTech industry found that the total amount invested in this sector rose from just over $4bn in 2013 to more than $12bn last year, Europe being the fastest growing region in the world.
“Investment in financial-technology (fintech) companies grew by 201% globally in 2014, compared to 63% growth in overall venture-capital investments, confirming this sector as a hot ticket.”
Several banks are looking into Bitcoin and blockchain technology, and how it could benefit existing operations by making them faster, cheaper and more robust. Correspondent bankers using SWIFT for inter-bank communications, had an introduction to Bitcoin recently, at the SWIFT Business Forum in New York. Presentations titled, “The Changing Face of Payments; the next frontier “ delved into how the current environment is putting additional pressure on organizations to increase processing efficiencies, reduce costs, while enhancing products and services all while complying with regulation.
Blockchain technology makes it trivial to keep accurate and indelible records - that cannot be modified by any one party. In addition, the authenticity of transactions is easy to verify as a group rather than using one central authority. Transfers on the blockchain are also not constrained by the time of the day, or day of the week.
Several prominent financial institutions and regulators have been looking into using blockchain technology for greater transparency in the financial markets, while also providing better customer service. Many believe that in the securities industry, challenging tasks like back office clearing and settlement, can be made more efficient through the use of this technology.