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Banco Santander UK has made available to its staff a mobile application which uses blockchain to transfer money.
Banco Santander UK has made available to its staff a mobile application which uses Blockchain to transfer money. In the battle among bankers to implement blockchain solutions to cut costs, has Banco Santander taken the lead?
Ed Metzger, head of innovation technology and operations at Santander U.K., says to Bloomberg:
“It’s the first time a U.K. bank has sent payments of this type via Ripple and launched it as a commercial service. Many people are doing lab style experiments, the key difference here is about getting real people to send real money for real purposes. I just paid my wife, who is Spanish, some money to a Spanish bank account this morning.”
Banco Santander is a global bank which is headquartered in Spain and traces its roots back to 1800's. Forbes lists Banco Santander as the tenth largest bank in the world and second largest bank in Europe (after HSBC).
Like all other financial institutions, Banco Santander has been looking at blockchain technology to make money transfer more efficient. It established a $100Mn fintech venture capital fund – Santander Innoventures in 2014 to look at disruptive innovations in the financial technologies space.
In mid-2015, the head of Santander Innoventures told Business Insider that the Bank had internally identified around 25 use cases where blockchain technology can be applied, including international money transfers, trade finance, syndicated lending and collateral management.
Santander Innoventures also launched a blockchain challenge in November 2015 to identify and accelerate development of early-stage blockchain innovators. Santander Innoventures' portfolio of investments include Ripple and Digital Asset Holdings.
The mobile application introduced by Banco Santander uses Blockchain technology and allows staff members to transfer funds between £10 and £10,000. Around 6,000 employees have been provided access to this application in this pilot program.
Metzger says to Financial Times:
“Clearly, it’s an area where, as an industry, we don’t have as good a customer experience as we could do . . . there are a lot of pain points. There’s lots of activity in international payments and customer experiences through normal channels isn’t great.”
The application uses infrastructure provided by Ripple. Banco Santander plans to scale up this rollout and provide access to all customers after completion of this pilot program.
There is immense competition among banks to implement advanced technologies, which could result in cost savings, especially in the payments space.
Andrew MacAskill and Huw Jones of Reuters writes:
“Blockchain is part of the growing financial technology sector being encouraged by Britain to keep the country's financial sector competitive with New York and Singapore. Santander and other banks such as Citi, BNP Paribas and Goldman Sachs are investing in the sector to avoid being left behind by start-ups racing to apply blockchain in payments, and clearing and settlement of trades.”
While many banks including Citigroup and UBS have been exploring blockchain technologies, Banco Santander seems to have taken the lead amongst banks in its actual implementation.
Circle, which is a social payment network, had obtained an e-money licence in UK and launched blockchain-based payments earlier using the infrastructure of Barclays bank.
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