Santander has launched a new app that lets people transfer money
internationally using blockchain technology, the cutting-edge
database protocol that underpins bitcoin.
The main benefits of the new tech are speed and accuracy.
The problem is these partner banks will often take a handling fee or processing fee that you might not be warned about at the start. That means that £100 sent could turn into £95 at the other end. With Santander's app, £100 sent means £100 received.
The new app, which for the moment is just being trialed with staff, will let people transfer between £10 and £10,000.
When it shows up in your account you'll be able to spend it immediately, too. Currently, incoming cash deposits will appear as a "pending" transaction, meaning it hasn't been cleared yet (basically been signed off by the bank). But blockchain transactions are "immutable" — that is, absolutely certain. So it does away with the "pending transactions" delay.
Ana Patricia Botin, chairman of Spanish bank Santander. REUTERS/Sergio Perez
Sigga Sigurdardottir, Head of Customer and Innovation at Santander, says in an emailed statement that the bank: "believe[s] new Blockchain technology will play a transformational role in the way we achieve our goals and better serve our customers, adding value by creating more choice and convenience."
Ripple is seen as one of the most exciting startups in the blockchain space. The company has developed a protocol that allows banks to use blockchain for transfers. It was founded by Chris Larsen, the co-founder and former CEO of leading US peer-to-peer loans marketplace Prosper.
The bank's new app has been developed in partnership with US blockchain company Ripple. Santander invested $4 million in Ripple last October, saying at the time working on a "proof of concept" using Ripple's technology for international payments and the technology could be rolled-out to customers to allow "international payments in real time, more efficiently, at a lower cost."
The efficiency of the new technology means transfers will show up within 24 hours, compared to the current wait times that can vary from one day to three days.
All this cuts out the need for records to be reconciled and makes transactions quicker, cheaper, and easier when compared to the current systems. Santander estimates blockchain technology could save banks $20 billion a year in costs.
Right now the Santander app allows payments in euros to 21 countries and dollar payments to the US only. If the staff trial goes well, Santander plans to roll out the app to customers later this year. Santander staff can use the app for free but if it does launch commercially it will charge a transfer fee. A spokesperson for the bank said no firm prices have been drawn up but said it would be "competitive."
And the blockchain technology also means that the amount you send is the amount the other person gets. Currently, international bank transfers involve your bank telling a partner banks in another country to put money into somebody's account. Then the two banks pay each other at the end of the day.
The blockchain protocol allows this by copying identical records across a network, in this case banks. It then makes all parties on a network sign off on transactions at the time they are sent to ensure they are accurate. It uses complex cryptography to ensure records can't be altered.
The app is able to do all this by using the blockchain protocol, a type of database set up first developed to underpin digital currency bitcoin. Blockchain, also known as distributed ledger technology, cuts out the need for a "trusted middleman" to sit in between parties in a transaction — the partner banks who take a fee. You can deal directly with whoever you're sending money to, just like handing them cash on the street.
A chart from Goldman Sachs explaining how the blockchain works. Goldman Sachs
International transfer is just one use case for blockchain technology that Santander is exploring. Mariano Belinky, head of Santander's fintech investment arm InnoVentures, told Business Insider last June: "We have internally identified 20 to 25 use cases where this technology can be applied." Other use cases include trade finance, syndicated lending and collateral management.
Bank of America Now Considers Crypto a Business Risk
Bank of America has cited cryptocurrency as a material risk to its business, public records show.
The technology could hamper the second-largest U.S. bank's ability to comply with anti-money-launde
New York Lawmakers Are Open to Revisiting the BitLicense
"Anyone in the crowd that does not think the BitLicense needs to be reformed?"
Not a word from the audience. Then, a few seconds later, laughter at the awkward silence.
But the question itself,
Video Game Giant Ubisoft Is Exploring Blockchain Use Cases
French video game publisher Ubisoft is exploring potential applications of blockchain in its Strategic Innovation Lab, which studies emerging technologies and their use cases.
Lidwine Sauer, the La
Bitcoin and blockchain consume an exorbitant amount of energy. These engineers are trying to change that
If blockchain technology is going to revolutionize how we transact with each other, computer scientists need to solve one big problem: It can consume way too much energy. The original blockchain,
Ethereum Governance 'Not That Bad' Says Buterin Amid Fund Debate
Ethereum's governance model isn't flawed, it's just badly communicated, the cryptocurrency's creator Vitalik Buterin said in a developer meeting Friday.
Coming amidst a heated debate over a proposa
Austria Planning New Regulations for Cryptocurrency, ICOs
Austria has joined the list of countries planning to regulate cryptocurrencies and will use as a model existing rules for the trading of gold and derivatives.
The government's central concern is cu
Jeffrey Gundlach says if you want to know where stocks are going next, watch bitcoin
Want to know where stocks are going next? Jeffrey Gundlach says take a look at bitcoin. "Strangely, bitcoin seems to be the poster child for social mood and market mood," Gundlach, the founder of
Elon Musk just revealed how much bitcoin he owns—and it's surprisingly little
Serial entrepreneur and tech billionaire Elon Musk recently shared how much bitcoin he has to his name and it's a surprisingly little amount â 0.25 BTC or about $2,531 as of publishing time.