UBS is putting preliminary plans in place to offer cryptocurrency investment products for wealthy clients, joining American firms in the quest to broaden access to this asset class in response to client demands. Sources familiar with the plan revealed that the Swiss bank is exploring various options to provide this asset class, noting that any investment product would constitute a very small portion of a client's total wealth due to the volatile nature of the asset. The options include investment vehicles from third-party entities, according to the sources.
Diving into Cryptocurrencies
More global securities trading firms are offering cryptocurrency services, and Goldman Sachs Group is delving deeper into the $1 trillion Bitcoin market, having opened up trading in non-deliverable forwards, a derivative linked to Bitcoin's price that pays cash. Meanwhile, Morgan Stanley plans to enable wealthy clients to access three funds that can own cryptocurrencies, and Bank of New York Mellon Corp is developing a platform to trade traditional and cryptocurrency assets, with CitiGroup also considering offering cryptocurrency services.
UBS stated, "We are closely monitoring developments in the cryptocurrency asset space... More importantly, we are interested in the technology underpinning cryptocurrencies, namely distributed ledger technology." Bitcoin remains the largest cryptocurrency, but the increasing momentum in other coins is attracting more interest, with proponents arguing that investors feel more comfortable investing in a diverse range of currencies, while critics suggest that the market may be in a bubble.
UBS fears losing clients if it does not offer this type of investment products for wealthy clients, according to sources. Philip Rickenbacher, CEO of competing local group Julius Baer, noted at a conference last week that the asset management division is looking to work with partners to provide clients access to digital assets, clarifying that the bank does not intend to implement trades linked to Bitcoin itself for now.
Using Artificial Intelligence
UBS CEO Ralph Hamers is exploring ways to cut costs and digitize operations even in servicing the wealthiest individuals in the world, requiring high trust between clients and the institution. He aims to use artificial intelligence to target selling more products to wealthy individuals globally. Hamers is changing how the bank spends on technology projects by assigning quarterly budgets instead of fixed annual financing. The bank spends about $3.5 billion annually on technology, maintaining existing infrastructure and modernizing it, as well as innovating new tools for employees and new products for clients.
