Santander and BBVA were recently invited to a special blockchain-focused meeting run by two very influential figures from the EU. Mariya Gabriel – EU Commissioner for Digital Economy and Society – and Roberto Viola – Head of EU Department of Communications, Content, and Technology were the two figures hosting what could prove to be an important moment in the EU’s growing relationship with blockchain technology.
Multiple top banks from around Europe were invited to the blockchain event, where the banks could discuss the impacts blockchain technology, as well as its future in the industry. There have been repeated calls for banks to implement blockchain technology in a bid to save customers money and speed up transaction times.
BBVA Already Dabbling in Blockchain
BBVA has already been exploring the possibilities of blockchain and its practical uses. In fact, it was part of a syndicate that provided a loan recently using blockchain technology to track the funds owed to each party. Smart contracts are also used to ensure payments are sent on time and distributed in correct proportions to each member of the syndication. This is the first move made by a European bank to actively use blockchain technology, and it could very well signal the start of a new era.
IATBA Set to Launch in Early 2019
The EU International Association for Trusted Blockchain Applications (IATBA) is set to launch in early 2019. It has been recruiting banks with these blockchain-focused meetings held behind closed doors. This way banks can openly discuss and learn about the world of blockchain without reporters grilling them for their stances on the technology. IATBA and the banks are creating a coalition to help develop blockchain-friendly regulations, which the EU will then start to implement, meaning that Europe is actively looking to become blockchain friendly. After a few weeks of negative sentiment, this could be the positive news traders have been waiting for.
Australian Banks Leading the Way
IATBA has largely been inspired to delve into blockchain technology by the Australian banking sector. Earlier this year the Commonwealth Bank of Australia (CBA) issued the world’s first bond that is entirely run and managed with blockchain technology. Dubbed the kangaroo bond, the World Bank gave CBA a helping hand in creating the technology and testing it to ensure smooth operation. It has since flourished in the Australian financial markets and more banks are looking to join the movement.
Traditional Banking is Very Expensive
Unfortunately, under the current system, banks are charged a fee per transaction. Rather than waiving this fee for paying patrons, banks inflate this charge and pass it on to consumers, making it very expensive to send money between accounts. At one point this year, it was more than 6,000 times more expensive to send money using Bank of America than with Bitcoin. Bank of America charges around $45 for a $90,000 transfer – to put that into perspective, the same amount would cost around $0.43 to send using the Bitcoin network. Bank of America is charged $0.83 per transaction by the Federal Wire Service – we will let you figure out their total markup.
Banks are starting to dip their toes into the world of blockchain technology, but are understandably scared at the same time. By joining cooperation groups such as the IATBA, banks can help each other out and perfect the overall implementation experience. If Santander and BBVA manage to use blockchain in their daily business activities, the implications could be huge in terms of pushing through mass adoption.