The Wall Street Journal: Swiss banking giant UBS is to open a technology lab in London to explore how blockchain technology can be used in financial services. The lab, set to open this month and occupy a dozen desks at Canary Wharf-based fintech accelerator space Level39 – a hub in London for financial technology startups– will bring together technology experts from the bank and the wider fintech community, UBS said.
Lab members and invited guests will experiment with how blockchain — the underlying technology behind bitcoin — can be adapted to process a wide range of financial transactions in a more efficient and cost-effective way, the bank said.
The lab will aim to develop new technologies that deal with industry-wide issues, such as the need to manage and analyze vast amounts of data, or better evaluate risk.
While many in financial services have expressed an interest in the underlying technology behind bitcoin, UBS’s is one of the first banks to go public with their plans. The idea is to get UBS more involved with the fintech crowd in London and open up to external innovation.
The blockchain is the public and decentralized online ledger which verifies transactions in digital currencies such as bitcoin. It is an indelible record, whose authenticity is verified by a network of computer users rather than a centralized authority.
Many have come to believe that this technology can be adapted to record and verify financial transactions, from clearing securities to making cross-border payments.
Last month the U.K. government announced that it would commit £10 million to support research in digital currencies technology, while last September the Bank of England recognized blockchain’s potential, saying that the technology could have “far-reaching” implications.
Speaking to Financial News last October, Oliver Bussmann, group chief information officer at UBS, said the blockchain had the potential “not only change the way we do payments but it will change the whole trading and settlement topic.” He described it as the technology with the biggest potential to disrupt financial services, and trigger “massive” simplification of banking processes and cost structure.
Last year the Swiss lender created a system of working groups, with dedicated funds to come up with innovative technology products.
Commenting on the lab, Bussmann said: “Fostering an open and collaborative environment between banks, start-ups and the investor community is essential to ensure we focus on promoting synergies between us, accelerate innovation opportunities and create real value for the industry.
Over the past year, many banks have backed or launched initiatives to increase their interactions with the fintech start-up ecosystem, as they seek to stay abreast with the rapid changes in technology which threaten their businesses.
Barclays runs a fintech incubator in London and New York and most of the major banks participate in a fintech accelerator program run by Accenture globally, while a number of lenders, including Lloyds Banking Group , back London-based Startupbootcamp FinTech.