The perception about bitcoin is undergoing a major change since the digital currency first made headlines for all the wrong reasons. Now more and more financial institutions are acknowledging the potential of bitcoin and blockchain technology to revolutionise the financial sector.



With the announcement of its 'blockchain innovation lab' earlier this year, UBS created quite a stir in the financial tech sector.



Speaking to CoinDesk, Alex Batlin, the former engineer heading up the lab, said that though financial technologies like peer-to-peer lending and crowdfunding platforms are growing, it's blockchain technology that could be the biggest threat or opportunity for banks like UBS.



"In principle it's probably one of the biggest confluences of technology and business right now."



The bank has set up a "small, agile team" that includes developers, business analysts and project managers inside Europe's largest FinTech accelerator, Level 39, who will work out if a business model could be enhanced or redefined by blockchain technology and whether its benefits outweigh potential costs.



"We believe it's the best combination of making sure we don't spend too much but also getting the most out of our learnings from that," he said.



He added that the team spends a lot of time brainstorming and coming up with unconventional business models and then testing them.



"We conduct experiments, which are different to proof-of-concepts, as we don't have a concept yet. We're just saying, here's a hypothesis, let's figure out could it work at all," he said and added, "The technology is so nascent, it's important to have the right set of expectations".



For companies in the financial technology sector, the UK will in no time become the focal point as it accounted for 42 percent of Europe's FinTech investment last year, while the sector employs over 135,000 people, many of which are in the capital. Particularly, Level 39 is close to Innovate Finance, the FinTech trade association that has strong ties with the government and the Bank of England as a frequent visitor.



"It's easy for people to come and meet here. You are not asking for people to come to UBS, you are asking for people to come to Level 39," Batlin said.



He went on to say that start-ups may find some of these problems too expensive to solve.



"A team of 12 can accomplish brilliant things, for sure. But some challenges require a level of resource to overcome, which the likes of UBS can contribute and become a valuable partner in this new world," he said, concluding, "I think the partnership between bigger companies and startups can work really well because we can complement each other."