UBS is the latest bank to launch a blockchain based solution targeted at corporates and institutions. Given there are often delays with cross border payments, the appeal is the ability to instantly move money between different UBS branches dotted around the world. So far it has piloted domestic transactions and international payments in US dollars, Swiss francs, Euros and Chinese renminbi on its private blockchain.
The main benefits of these types of solutions are the ability to move money instantly across borders including 24/7, added transparency and the possibility of programming conditions. With digital payments, the transfer either happens or it does not. Hence, there’s less risk of in-limbo payments, as happens sometimes on conventional payment rails.
For corporate treasurers, that means they can ensure money is in the right place at the right time, and they control the extent of credit charges or the size of liquidity buffers. Programmability allows them to embed conditions for when payments are made.
“Blockchain-based payment solutions for cross-border payments are a strategic focus for UBS,” said Andy Kollegger, Head UBS Institutional & Multinational Banking.
One of the pilot participants was automotive supplier Autoneum. Talking about UBS Digital Cash, Jank Hahn, Autoneum’s Treasury head said, “They make cross border transactions faster, on time and provide a seamless traceability, which is a huge benefit when operating in a global market.”
UBS leans into blockchain
UBS highlighted how this complements its involvement in wholesale central bank digital currency (wCBDC) trials in Switzerland’s Project Helvetia and the BIS cross border payment Project Agorá.
Three Swiss banks, including UBS, are exploring interbank tokenized deposit payments under the umbrella of Swiss Banking Association.
The bank is also one of the founders of Fnality, the wholesale settlement solution based on blockchain that tokenizes central bank money.
UBS has been leaning into blockchain for years and has been an early adopter of solutions supporting intraday transactions, especially for collateral mobility. It was one of the first users of Broadridge’s intraday repo solution (DLR) stateside, including for cross border transactions. In Europe it adopted HQLAᵡ early on. Plus, it has taken part in trials of the soon-to-launch intraday FX Swaps platform, Finteum.
Meanwhile, UBS joins other banks that are rolling tokenized deposits or blockchain-based bank accounts, with JP Morgan the first to launch JPM Coin (now Kinexys Digital Payments). Last year Citi unveiled a Citi Token Services pilot which went live this year. And last month DBS Bank launched DBS Token Services.
Ledger Insights Research has launched a report on bank stablecoins, tokenized deposits and DLT payments, outlining more than 70 projects.
