During their introduction at this week's Distributed Ledger Challenge in New York, Santander InnoVentures managing partner Mariano Belinky and Banco Santander R&D chief Julio Faura spoke at length about the bank's interest in the blockchain and how it believes the technology can significantly reshape how it does business.
"It’s something we really believe is going to change the world," Faura said at the time.
Held this Wednesday, the event saw five startups pitch their businesses to a panel that included both Santander officials as well as representatives from the bitcoin and blockchain space. In the end, Cambridge Blockchain, a startup focused on identity solutions for blockchain-based systems, took home the $15,000 prize.
It was a gathering that both Belinky and Faura indicated had exceeded their expectations, and one that may be repeated in the future.
In conversation with CoinDesk, Belinky and Faura suggested that the competition was a reflection of the shifting attitudes within Banco Santander toward the technology.
Belinky told CoinDesk:
"Ten months ago we were having discussions around 'What is blockchain?', 'What is this technology?’ [and] 'Why are we so excited about it'. Now are getting to a level where we can have some informed discussion about this or that use case, whether we want permissioned or permissionless [blockchains], and which stakeholders and other banks we should talk to."
Faura said that the bank's leadership is giving its research team, which he leads, a degree of independence when approaching possible applications of the technology. However, he cautioned that any commercial products that may emerge are contingent on further experimentation, as well as the development of industry standards.
"We're being given enough freedom to work on it and everybody seems to be quite excited, but it’s not like we are betting the whole bank on new technology that we still don’t understand," he said.
According to Faura, the bank’s early investigation of the technology focused primarily on bitcoin and how the digital currency – it being a network of pseudonymous actors who don’t need to trust one another to transact – would impact its business.
But it was after the Sibos banking conference in Boston, held in September 2014, that both Banco Santander and other financial institutions began to solidify how they might go about actually implementing their own types of blockchain systems, he said.
"At that point, after Boston, I think, that’s where the blockchain vs bitcoin debate started," he said. "So, I think at that phase we understood that using distributed techniques was a good way to get more efficiency, reduce costs and overall have a much better service for our clients."
Faura said that Banco Santander has been investing more time exploring the use of smart contracts as a vehicle to pursue concepts like machine-to-machine payments and micropayments.
It was this year, he suggested, that the bank may push more aggressively toward in the coming months.
"The other experimentations around smart contracts and micropayments and so on, we’re being a bit more visionary here. We're trying to lead it, we're trying to find new things to show to our clients," Faura said.
From talk to walk
Both Belinky and Faura suggested that the next six to 12 months would be significant for Banco Santander’s blockchain efforts.
Belinky said that after months of experimentation and testing, he hopes the bank will move forward on a product that, in time, could be presented to its customers for possible use.
"My hope is that we have a implementation we can talk about. I’m getting really tired of talking about it," he said.
Yet to get to that point, he continued, would require a series of steps that includes regulatory and legal approval and further testing to reinforce operational resiliency. This work, he said, would take place in the context of both internal work and alongside other banks in groups like the consortium led by New York-based startup R3CEV.
"It’s a question of how can we go through all of those tests," Belinky explained. "In some cases, we are working with other institutions, and in others it’s happening on our own."
For Faura, the next year will be shaped by further tests and conversations with industry stakeholders and other financial institutions, as well as its client base.
"I think this is a good beginning," he said.