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.
Amsterdam's Airport Lets Travelers Swap Leftover Euros for Cryptos
Schiphol – the international airport serving the Netherlands' capital city, Amsterdam – is launching an ATM that will allow travelers to exchange their euros for bitcoin or ethereum.
The airport ex
National Chinese Science Academy Launches Blockchain Lab
China's federal science institution, the Chinese Academy of Sciences, is taking part in a new research effort around blockchain.
The highest academy for science in China said it had established a n
St Louis Fed Now Tracks Crypto Prices on Its Research Database
The St. Louis division of the U.S. Federal Reserve Bank is now tracking the prices of four cryptocurrencies in its research database.
According to an announcement on Tuesday, Federal Reserve Econom
Chinese Gov’t Rates EOS as the Best Public Blockchain, Bitcoin Drop to 17th
EOS tops the public blockchain among 30 projects in the cryptocurrency space, while bitcoin, the original and largest cryptocurrency, is ranked 17th, according to the Chinese government’s second mon
Bloomberg Terminal Adds Huobi's Cryptocurrency Market Index
Cryptocurrency exchange Huobi announced that financial data firm Bloomberg has added the HB10 crypto market index on its terminal for subscribers.
In an announcement on Thursday, Huobi said users o
Skycoin’s Chinese Marketing Team Took CEO Hostage and Stole 18 Bitcoins
The blockchain project Skycoin, which touts itself as the “the new internet for the new world”, saw a major sell-off over the past two weeks after an insider trading and a series of scandals were
Winklevoss Brothers Score Another Crypto Investment Patent
Crypto exchange Gemini founders Tyler and Cameron Winklevoss have long sought the creation of a bitcoin exchange-traded fund.
And while that process remains in flux, a company tied to the brothers
Why bitcoin made a comeback after the South Korean exchange hack
Bitcoin made a comeback despite crashing after a recent hack on a South Korean exchange, and two cryptocurrency traders explained why it rebounded. Charlie Lee, the founder of Litecoin, a global