Bad Year For The Financial Sector?
It is seemingly a bad year for the financial sector. The S & P 500 Financial Index is down 1.7 percent so far this year. The index’s downward slope may become even worse with the proliferation of blockchain technology, which forms the basis of cryptocurrencies.
Blockchain technology’s effects could be widespread, according to Sergio Ermotti, the CEO of UBS Group. Ermotti stated that
“Our industry will continue to be under pressure, in terms of gross margins. It’s no doubt. . . . The only way you can stay relevant is not only by being strong in terms of capital, in terms of products, the quality of the people you have, advice you give to clients. You need also to be able to price it correctly.”
Ermotti further stated in regard to the financial industry that blockchain technology may allow the “freeing up of resources,” enabling the industry to become more efficient.
UBS is seemingly paving the way for other companies to follow suit. In Fall 2017, UBS joined a blockchain partnership with Batvia, IBM, the Bank of Montreal, Commerzbank and Erst Group. It may be interesting to follow whether other companies in the financial sector respond.