Santander Bank, the world’s 10th largest bank, has been investigating blockchain technology for a while. The bank claims to have observed 20–25 use cases for blockchain internally. A report co-authored by Santander estimated that blockchain technology could reduce banks’ infrastructure costs by up to $20 billion (£12.8 billion) a year.
Recently, Santander Bank launched a new app to facilitate live international payments (foreign remittances). At present, the bank claims to be the first bank in the UK to leverage blockchain for international payments.
Santander introduced the new app as a pilot program, powered by blockchain technology which is backed by Ripple. The app uses core technology provided by Ripple (Santander InnoVentures owns a stake in Ripple). The app connects to Apple Pay, where users can confirm payments using Touch ID. It lets users transfer between £10 and £10,000, and payments can be made from British pounds to euros and US dollars. In October 2015, Santander InnoVentures raised $4 million in Ripple’s Series A funding round as an investor, bringing the round’s total to $32 million.
LTP has found that a total of 26 different banks have either partnered with or expressed interest in exploring blockchain. They are – JP Morgan, Citibank, Barclays, Credit Suisse, BBVA, Santander, Lloyds, BNP Paribas, Bank of America Merrill Lynch, HSBC, Deutsche Bank, RBS, Rabobank, ABN Amro Bank, ING Bank, Westpac, Commonwealth Bank, ANZ Bank, DBS Bank, Societe Generale, Standard Chartered, LHV Bank, Fidor Bank, CBW Bank, Cross River Bank and USAA Bank. However, Santander claims to be the first in using blockchain for cross-border remittance. The move is a breakthrough response to the wave of digital payment providers scare to pull customers away from banks.
Mariano Belinky, Managing Partner of Santander InnoVentures said Ripple has the technology, talent, and momentum to address many such scenarios, and is exploring how best to apply Ripple technology in the bank. “Ripple and Santander share a common vision of the future of the industry, and we intend to jointly advocate it in the community,” According to Ripple, its technology offers a real-time cross-currency settlement solution that is flexible enough to comply with the risk policy, privacy and compliance needs of banks. Ripple is architected to fit within bank's existing infrastructure, resulting in minimal integration overhead and business disruption.
Ripple is also working with several other banks across the world. Remittance is one of the most important use cases right now.
The financial services industry is on the cusp of a major transformation and the aim is to enable transparent, secure and efficient financial services at a lower cost. It’s important to note that many banks have been exploring blockchain in some way or the other. They have set up teams, performing experiments, and investing time and money as they don’t want to be left behind.