It is no secret that major banks have a vested interest in the future development of blockchain technology. But as you would come to expect from a financial system where total control and centralised authorities play a major role, banks are not necessarily leaning towards Bitcoin. In fact, Santander InnoVentures – part of the Santander group – has pumped another US$4m into the Ripple ecosystem.
Ripple – Bridging the Gap Between Banks and Digital Currency
Revamping the international money transfer service around the world will take quite a bit of time to accomplish. Established financial institutions have been using the same outdated systems for decades now and despite its blatant shortcomings, are not planning to relinquish control in a heartbeat. That being said, this is why Ripple is a perfect “temporary fix” towards evolving into a blockchain-based financial ecosystem.
The way Ripple works is as follows: XRP tokens are exchanged in a frictionless manner into fiat currency, which completely disrupts the epicenter of failure that is plaguing the banking world today. Funds transfers, which now take anywhere from a few hours up to a few weeks to complete, will become instantaneous, all the while the associated costs are being kept fairly low.
It should come as no surprise to find out several high-profile banks have shown great interest in the Ripple technology, including the Royal Bank of Scotland, and Santander. International funds transfers would become a breeze, which would in turn help banks regain some of their lost allure when it comes to controlling users’ monetary supplies.
Santander, one of Spain’s largest banks to date, has created Santander InnoVentures, which controls a US$100m fund. The main goal of this venture is to keep an eye out for new and innovative technologies to support Santander’s customer base and expand the bank’s reach beyond the borders of Spain. Anything closely related to blockchain technology or payment protocols is of great interest to the financial world and Santander is no exception.
In fact, this is the first investment made in an emerging blockchain business by Santander InnoVentures. It has taken a while until Santander came to this decision, but you can rest assured the potential to reduce overhead costs by billions of dollars per year played a key role in the decision making.
“We believe Ripple possesses the talent, technology and momentum to address many of these scenarios and are actively exploring where and how best to apply Ripple technology inside the bank. Ripple and Santander share a common vision of the future of the industry and we intend to jointly advocate it in the community.” – Santander InnoVentures managing partner Mariano Belinky stated.
But Ripple’s disruptive aspect has been raising eyebrows beyond the financial sector as well. Seagate Technology, one of the world’s leading storage data companies, was part of Ripple’s latest US$28m round of funding. This may seem a bit strange, but few people are aware that Seagate Technology also houses a treasury arm focusing on instantaneous international money transfers. Such a powerful network and technology will be more than beneficial to this part of the company.
Blockchain Technology is the Way Forward
Even though a lot of people would want to see banks embrace Bitcoin directly, it remains very unlikely this will ever be the case. However, the genuine interest from financial institutions in blockchain technology should be seen as a “vote of confidence” from the traditional financial world to the digital currency ecosystem.
It will be interesting to see what this new round of funding can bring to the table for Ripple, and how the ecosystem will progress from this point forward. Despite all of this attention, there has been little to no exciting news announced by Ripple in the past few months. Then again, rolling out an entire payment network on a global scale is not something that can be completed overnight.
Images courtesy of Ripple, Santander, Santander InnoVentures