- U.K. lender says first to use blockchain for global payments
- About 6,000 employees could participate in the pilot program
In the battle among banks to make use of blockchain, Banco Santander SA’s U.K. unit said it’s first among British lenders to use the technology for global payments.
The Spanish lender’s London-based operation introduced a mobile application for staff that uses blockchain to enable transfers of between 10 pounds ($14.70) and 10,000 pounds, the firm said in a statement on Thursday. As many as 6,000 employees in a pilot program can access the tool, which uses infrastructure provided by Ripple, a fintech company backed by the bank’s venture-capital fund.
Santander is among global lenders including Citigroup Inc., UBS Group AG and Barclays Plc vying to make use of the technology behind bitcoin in an effort to cut costs and stay a step ahead of digital challengers. Blockchain systems, essentially a verified public ledger of transactions, can be used to buy and sell any asset from currency to stocks and bonds without the need for middlemen such as banks and governments.
“It’s the first time a U.K. bank has sent payments of this type via Ripple and launched it as a commercial service,” Ed Metzger, head of innovation technology and operations at Santander U.K., said by phone. “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.”
Santander said it plans to make the application available to consumers after it completes the pilot program for employees, without providing a precise date. The tool, which is only available on Apple Inc.’s iPhone, can make sterling-denominated payments into euros in 21 countries and dollars in the U.S. Transfers are initiated via Apple Pay before passing through the blockchain-based application, reaching a recipient bank account using traditional payments infrastructure.
The payments take one day, rather than several, as using blockchain for part of the process enables quicker processing, Metzger said. Transfers could be instantaneous in the future if all parties in a transaction use blockchain systems, he said.
The announcement from the Spanish bank follows a similar statement from Circle, a social payments company, which said last month it partnered with Barclays and was the first to offer sterling-denominated payments using blockchain technology.