"We have internally identified 20 to 25 use cases where this
technology can be applied," Mariano Belinky, head of Santander
InnoVentures told Business Insider at MoneyConf in Belfast this
week. Belinky reeled off international money transfers, trade
finance, syndicated lending and collateral management as some of
the areas where blockchain technology could be applied.
Santander InnoVentures, which Belinky heads, is the Spanish banking giant's $100 million (£64 million) fintech investment fund, launched last year. The fund has made 3 investments so far and Belinky said 2 more are close to completion. A source told Business Insider that one of these is a startup working on blockchain technology. Belinky declined to comment.
Banks mostly aren't interested in bitcoin, but they are interested in the software that runs the digital currency — the blockchain.
Belinky told BI: "We’re very excited about distributed ledgers and blockchain technology. They really have the potential to disrupt many of the basic processes we have underlying our transactional products."
Faura is heading up a team in Santander dubbed Crypto 2.0 — referring to cryptocurrencies — which is carrying out experiments with the blockchain and digital currencies.
Pair thinks it will be at least 5 years before any banks seriously adopt a version of blockchain technology.
But Faura adds: "This thing will only be interesting if many banks take part and collaborate. We are talking and experimenting with several banks."
"What we see as the foundation use case, which is international payments, we don’t really need a coalition of 50 banks to make it work. We have ten major geographies. Just us connecting our ten major geographies will allow 100 million customers to make instant payments worldwide. If we partner with two or three banks similar to us we’ve got pretty much global coverage."
"We still haven’t made anything official, we haven’t announced anything publicly, but we have an internal team working on this. We’ve done some proof of concepts."
Most banks are writing off bitcoin while focusing on the underlying blockchain software. REUTERS/Jim Urquhart
Stephen Pair, CEO of bitcoin company Bitpay, told me during our interview at MoneyConf that he's in conversation with several banks about the potential of blockchain and related technologies. But he said: "I’ve been in and around banks for a while and they take years, even with software that’s well known and well understood."
He adds that while Santander is very keen to explore the possibilities of blockchain, we won't be sending cash over blockchain networks any time soon. Belinky says that "while getting to a working prototype could be something that we do within months, getting to an actual product that regulators say is good to go and the compliance guys like — that will take a while."
That makes it attractive to banks looking to soup up their money transfer businesses, but the technology also has potential in other areas — distributed ledgers could be used for "smart contracts" when banks make loans, for example, recording who's borrowed what across a public network.
Santander chairwoman Ana Botín. REUTERS/Stefan Wermuth
The blockchain keeps a public record of transactions, spread across a distributed network, and allows much quicker transfer of balances. As a result, sending bitcoin is faster, cheaper and more transparent than sending traditional currencies.
Belinky chips in: "It’s like having the first phone — there’s no point, you can’t ring anyone."
Santander, the world's tenth biggest bank according to Forbes, is one of several lenders investigating how to use the blockchain in traditional banking. UBS has set up a blockchain research lab in London, Goldman Sachs has invested in bitcoin startup Circle and Nasdaq is also experimenting with the technology.
Julio M Faura, global head of R&D innovation at Santander, told Business Insider: "For us, the first obvious space to explore all of this in is payments, particularly international payments. Later on we think smart contracts have the potential to transform many of the other things we do.
Banks run on systems that were in some cases built decades ago and as a result are slow, costly and cumbersome. The blockchain — the program that lets people send bitcoin to each other and records those transactions — doesn't have these legacy issues.
It's pretty clear why the banks are doing all this. As well as making their systems smarter, it could save them a huge amount of money. A report co-authored by Santander earlier this month estimated that blockchain technology could reduce banks' infrastructure costs by up to $20 billion (£12.8 billion) a year.
Bitcoin Price Trend and Investment: Reward Justifies the Risk
The recent rise in Bitcoin price is being cheered upon by the seasoned cryptocurrency community. The price rally and all the excitement surrounding it has influenced many people to jump on the
Blockstack Unveils Decentralized Tokenized Blockchain Web Browser
As the list of dApps (decentralized applications) grows ever longer, a new class of platform has started to arise. Decentralized browsers have been hitting the market at a steady stream this year, off
Bitcoin Should Figure in Your Investment Porfolio, Says Asset Advisor
Boris Schlossberg of BK Asset Management has joined the cadre of investment advisors who see bitcoin as a way for investors to hedge their bets against market uncertainty. Schlossberg, according to CN
The Latest Bitcoin Price Surge May Not Have Much to Do with Trade Speculation
Bitcoin, the popular cryptocurrencyâs price has been on a constant upward trend until yesterday, creating new records every other day. The increasing price trend has reminded many of the Mt Gox
In Wake Of Global Cyberattacks, Calls For Bitlicensing Grow
Netanella Treistman of Israeli law firm Yigal Arnon & Co. examines the growing pressure on global governments to issue Bitcoin licenses to manage the cryptocurrency-related concerns. Earlier this
Bitcoin Reasserts Itself Taking Back Over 50% Crypto Market Share
After dropping to a low of 46 percent, Bitcoin dominance (Bitcoin’s market capitalization as a percentage of total cryptocurrency market capitalization) is back over 50 percent. In a bear market,
All Top 20 Altcoins Fall By At Least 30%, Ripple Down to $6.2 Billion
Bitcoin, which experienced a 20 percent price drop from $2,500 to $1,900, actually had a relatively decent day.
All top 20 alternative cryptocurrencies (altcoins) declined by at least 30 percent on
Ethereum Briefly Accounts For 50% of Bitcoin’s Market Cap After Strong Rally
After surpassing the market cap of Ripple and reclaiming its spot as the second largest cryptocurrency or cryptoasset, Ethereum’s market cap briefly accounted for 50 percent of bitcoin’s market cap.