Blockchain startup Ripple just got a big boost from Santander
Santander InnoVentures, the bank's $100 million tech investment fund, has invested an estimated $4 million in Ripple, a Silicon Valley company adapting the blockchain for mainstream finance.
The bank is also 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."
Business Insider first reported that Santander was considering an investment in a blockchain startup back in June.
While not a huge investment, it represents a strategic stake for Santander that will allow the bank to keep up with developments in the blockchain space. Blockchain, or distributed ledger, technology is one of the most hotly anticipated technology developments in finance in a generation.
The blockchain is a distributed ledger technology that underpins bitcoin. An open network that anyone can access and inspect, it records and powers transfers of bitcoin.
The software cuts out the need for a "trusted middleman" to sit in between parties in a transaction as it acts as that middleman - the software generates code that itself acts as the trusted party. This makes transactions quicker, cheaper, and easier when compared to the current systems banks use.
The blockchain works with bitcoin because it is a digital-only currency represented by lines of code. But Ripple is looking at adapting the technology so that it can be used to transfer real-world currency balances safely and securely.
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. Ripple was founded by Chris Larson, the co-founder and former CEO of leading US peer-to-peer loans marketplace Prosper.
Ripple is already working with New York startup up R3, which is heading an alliance of 22 of the world's leading banks exploring the potential of blockchain technology.
Mariano Belinky, managing partner of Santander InnoVentures, said in an emailed statement to Business Insider:
We believe that distributed ledger technology is one that will significantly disrupt a number of processes within banking. While we've identified a dozen and a half or so applicable use cases for the technology, we decided to focus on the considerable applications across the international payments space primarily, as this was where we saw it delivering most value to Santander customers in the near-term. From a regulatory and maturity perspective, we saw Ripple as the best partner to move ahead with in this.
The wider Santander bank is currently launching proof of concepts using Ripple technology - if this goes smoothly we anticipate that, further down the line, Santander clients will see more transparent, efficient and speedy payment products globally, as well as enabling international payments in real time, more efficiently, at a lower cost.
The investment takes the total raised by Ripple to $32 million. Other investors include the venture capital arm of US futures and options exchange CME Group and data storage firm Seagate Technology.
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