Santander: Will Banks Wake Up From Their Blockchain Siesta?

By Madhvi Mavadiya | 14 July 2016

Will blockchain be the catalyst for change for Spanish bank Santander with Blythe Masters on board? The blockchain guru left the banking world in 2014 to build her startup Digital Asset Holdings, which has since raised $60 million from financial institutions. She has now been tasked with advising Santander on how new fintech and more specifically, blockchain, can improve traditional banking.

According to CityAM, she will remain as CEO of Digital Asset Holdings and join the board of Santander’s online bank Openbank. Santander boss Ana Botin highlighted that help from Masters could transform digital innovation for the bank. “Masters will bring her expertise in banking, business and blockchain where it will have significant impact to our digital banks, International Advisory Board and strategy team.”

As a result of this new role, Masters has quit as car loans provider Santander Consumer USA’s (Scusa) chairwoman and according to The Financial Times, could mean uncertainty for the business, which in turn proves how valuable her expertise is. Former CEO of OneChicago futures exchange Bill Rainer will take on the role so that Masters can concentrate more extensively on globalising digital banking.

The FT also reported that Scusa’s parent company, Santander Holdings USA, was criticised by the Federal Reserve last month for capital planning weaknesses and risk management data management. Botin’s mission is to “fix the US bank” by 2018 as it is not in the shareholder’ interests to sell the business now.

Santander is fast becoming a facilitator of fintech as it was announced earlier this year that the bank was the first to introduce Ripple’s blockchain technology in order to provide the ability to make international payments on their new application. With the connection to Apple Pay and the biometric capability of Touch ID, Santander is definitely taking advantage of blockchain in order to improve cross border payments.

The need for finance has evolved from providing a physical pound in your pocket or card in your purse, where you pay at a tll, to being seamlessly integrated into a new, always on, connected lifestyle,” head of customer and innovation at Santander, Sigga Sigurdardottir said. While Santander is making the most of fintech, startups are continuing to create products that both buy-side and sell-side financial institution can use, like SETL.

Peter Randall, CEO and co-founder of SETL told Business Insider that at the moment, blockchain is all talk. “What it’s really responding to is the fact there are a lot of people out there talking about it but they’re talking about it because they haven’t actually got anything to show. We have both an enormous amount of experience in how to launch projects like this but also an enormous amount of experience in terms of actually having working prototypes,” Randall said.  

Blockchain is definitely worth talking about as head of marketing and communications at SIX Securities Services, Avi Ghosh highlighted when he said that if we were to create a word cloud for the most used terms in fintech last year, “blockchain would probably occupy the biggest space. Collateral management and compliance, would, however, still loom large.”

2015 was the year that banks started to experiment with blockchain technology. Bank of New York Mellon used blockchain technology to build an application on its internal network which is compliant with the bank’s desire to open source technology, as it helps to identify different ways to make payments easier. It was also reported around the same time that UBS would test the uses of blockchain in an innovation lab created at Level39’s HighGrowth:42.

Barclays also started working with Swedish online bitcoin exchange Safello to figure out how it could be implemented in retail banking. Citigroup took a different approach and attempted to solve problems that banks currently face by producing their own currency named CitiCoin, which can be used for cross border transactions.

In 2015, Blythe Master said that the US is likely to fall behind in the adoption of blockchain. “There are jurisdictions outside the US where it will happen quicker and that’s because there are markets where there is a vertical integration all the way from the exchange through to the custodian’s custodian if you will,” Masters said. She continued to say that it will probably be seen outside the US before it is seen meaningfully in the US.

In a conversation with bobsguide, Santander Innoventures boss Mariano Belinky said that the excitement around blockchain started in 2014, “when people started having better conversations about digital currencies but also the underlying technology. Then the Treasury came out with a paper encouraging banks to look at distributed ledger. Up until then banks thought it was too risky to get involved. R3 came about and the whole thing started accelerating throughout 2015.”

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development