The Spanish banking group, Santander’s venture arm – Santander InnoVentures has recently published a report titled The Fintech Paper 2.0 in which the company explores the potential of using Blockchain technology in the banking sector. According to the report, Blockchain technology can potentially save anywhere between 15 to 20 billion dollars for banks.
The study was conducted in collaboration with Anthemis, a fintech venture fund and the research firm Oliver Wyman to understand the effect of the latest fintech technologies on the banking sector. Blockchain technology has been increasing used for various applications apart from recording Bitcoin transactions.
Some of the applications of Blockchain technology include proof of existence platforms, digital records management, intellectual property management, smart contracts and many more. There are many Blockchain based platforms like Factom and Ethereum which are developed specially for catering to data management and Internet of Things applications.
The banking sector incurs huge infrastructure costs for cross border payments, securities trading and regulatory compliance. These costs can be reduced greatly by utilizing the same Blockchain technology used for Bitcoin transactions and data management. Blockchain is known for its ability to store data in an encrypted form which can be accessed only by using the right hash key. Moreover, Blockchain is an open distributed network, on which transactions can be easily verified by the community instead of a central authority. Apart from that, entries made on Blockchain are permanent and tamper resistant which makes it impossible to delete. So, whatever goes into the Blockchain remains there for ever.
Santander is not the only bank that is exploring the potential of Blockchain for its operations. Some of the other banks exploring along similar avenues include UBS Bank, WestPac, and ANZ. Recently, The Commonwealth Bank of Australia announced its partnership with Ripple labs to utilize Ripple Network for interbank transactions. Infosys, an Indian IT giant recently announced integration of Bitcoin support to its Finacle banking software which is used by banks across the world.
As the world wakes up to the huge potential of Blockchain technology, we can expect more innovations to happen in the sector.