Zurich Cantonal Bank (ZKB) has partnered with UBS, a Zurich-based financial institution, to facilitate the exchange of subscription and redemption instructions for fund units via blockchain technology. This collaboration marks the first instance of such transactions being executed through blockchain within the Swiss financial sector.
As part of the process, ZKB transmitted subscription orders for UBS fund units using FundsDLT’s blockchain solution, a subsidiary of Deutsche Börse AG headquartered in Frankfurt, Germany. UBS, in turn, provided real-time transaction updates back to ZKB through the same blockchain network.
A senior executive at ZKB noted that blockchain adoption is expected to enhance efficiency in transaction processing for clients. The executive emphasized that the technology holds significant potential in adding value to financial operations. The recent transactions highlight the bank’s expertise in blockchain implementation and contribute to its ongoing initiatives aimed at adopting innovative technologies.
Transforming the Fund Sector Through Blockchain Integration
The application of blockchain technology is enabling financial institutions to streamline their processes. While securities settlement has witnessed notable efficiency improvements in recent years, the fund sector still offers considerable potential for further enhancements. The insights gained from this pilot initiative are expected to provide valuable learnings for future developments.
By leveraging Distributed Ledger Technology (DLT), financial institutions can ensure real-time data availability regarding the status of fund orders. This advancement enhances transparency in fund transactions, offering improved clarity and operational efficiency.
A representative from UBS Asset Management pointed out that distributed ledger technology plays a crucial role in innovation within the fund sector. The pilot project demonstrated how financial intermediaries could utilize blockchain to facilitate more efficient communication, ultimately improving operational workflows. By testing blockchain-based solutions in live transactions, institutions can expand their expertise and contribute to the creation of practical applications. The executive further highlighted that collaborative efforts within the Swiss financial sector are essential in driving advancements in blockchain adoption.
Expanding Blockchain Adoption in the Swiss Financial Sector
Switzerland’s financial industry has established itself as a leader in adopting cutting-edge technologies, with blockchain applications becoming increasingly prominent. The latest blockchain-based transactions are part of ZKB’s broader initiatives to explore and implement DLT technology for its clients.
Beyond fund transactions, ZKB has been involved in several blockchain-driven projects. The bank has played a significant role in supporting multiple issuers in the issuance of digital bonds under the Swiss National Bank’s Helvetia III project. Additionally, since September 2024, ZKB has expanded its services by offering trading and secure custody of selected cryptocurrencies to its clients and third-party banks.
As blockchain continues to gain traction in the financial sector, ZKB and UBS remain committed to exploring its potential to enhance efficiency, transparency, and accessibility in financial operations.