Bank of Santander Confident in Blockchain Development

The European Blockchain Convention in Barcelona, which took place between 20-21 January, gathered representatives from most of the major European banks. As expected, the key topic was the usage of blockchain technology as part of a banking institution.

Santander is more than confident about blockchain use

On Monday, the biggest bank in Spain announced that it is formulating financial products that rely on blockchain technology. Santander has already done different pilot tests and now has to test the service on blockchain.

Although Santander’s commercial strategy is still confidential, María Concepción de Monteverde, the bank’s head of blockchain, noted that blockchain technology would need another three years to make any substantial progress:

“Banco Santander conducted a real pilot test with the issuance of a bond for 20 million euros at the end of the year… It was a real pilot test [using the Ethereum blockchain], with a real transaction with the bank as seller and buyer. The natural step for the future will be to offer a similar product aimed at the financial market.”

What are the realistic expectations?

While Santander is advancing in their blockchain developments, their competition is searching for ways to properly use the technology for profitable purposes. Some of the other European banks that attended the forum were the European Central Bank (ECB), Bank of England, ING and BBVA.

European banks are just beginning to figure out Distributed Ledger Technology (DLT) and blockchain, and creating business models based on them would take even more time, according to CriptoNoticias.

Banking representatives were on the same page when it comes to the usability and application of decentralised networks and blockchain but the need for more time was also a common conception. Some of the biggest obstacles that need to be tackled are cybersecurity, interoperability with existing systems, development costs and of course, regulatory aspects.

Scott King, ING’s head of blockchain believes that the technology is physically ready but banks are not ready to implement it.

The central banks’ opinion

The European Blockchain Convention hosted executives from central banks who also gave their opinion on blockchain technology.

Bank of England’s research team leader, Michael Kumhof, stressed on the significance of cryptocurrencies and the importance of the transition phase that banks need to undergo:

“What is most concerning at present is the transition to blockchain technology and cryptocurrencies […] central banks need tools to control the evolution of assets, since as always, the stability of the financial system is the main concern of central banks.”

Dirk Bullmann, an ECB’s innovation team member believes that central banks should be in charge of supervising and regulating technology ideas that should be implemented by private organizations. He added that the drive for mass adoption should come from commercial banks.

Carlos Arena from the blockchain start-up R3 explained that probably the biggest benefit of decentralized platforms is their lower cost per transaction.

Some of the Spanish blockchain companies were presented at the European Blockchain Convention. A report that was released on Tuesday showed that approximately 76 blockchain companies are active in Catalonia alone, which is a huge %1,117 rise since 2018.

These 76 companies have approximately 400 employees and a collective business turnover of 9.5 million euros. Blockchain projects are mainly undergone in sectors like food, commerce, logistics, health care, and public administration.