The CEO of Swiss financial services provider UBS Group Sergio Ermotti said that blockchain will be essential for the financial services industry in an interview with CNBC June 18.

Ermotti said that the underlying technology of cryptocurrencies will allow “[the] freeing up of resources to become more efficient,” adding that “[it] is a great way to allow us to… reduce costs.” He stated that blockchain will prove to be transformative to the industry’s cost base in five to ten years’ time, adding that prioritizing the application of blockchain technology will ensure that UBS remains competitive:

"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."

UBS joined a blockchain partnership called Batavia with IBM, Bank of Montreal, CaixaBank, Commerzbank, and Erste Group last fall. The project performed its first pilot transactions in April, which involved sending cars from Germany to Spain and furniture production textiles from Austria to Spain.

While UBS has been exploring blockchain use cases for its business, the financial services giant remains skeptical about cryptocurrencies. UBS chairman Axel Weber said earlier this month that the bank will not offer its customers trading services in Bitcoin or any other cryptocurrencies. Weber even called for stricter controls on crypto, saying that, "[cryptocurrencies] are often not transparent and, therefore, open to being abused.”