SEB has signed an agreement with Ripple, a San Francisco based fintech company, to use their blockchain technology solution as a basis for payment transactions. The first step will be to enable customers to make real-time transfers between SEB accounts in Stockholm and New York.
“This is a way to explore the potential of new technologies and an example of how we, by working with innovative technology companies, can be even more relevant to our customers,” says Paula da Silva, head of Transaction Services at SEB.
Blockchain technology means that all parties involved in a transaction share an identical copy of a common ledger. A transaction is recorded instantaneously in both the sender’s and recipient’s version of the shared document. The transaction is encrypted and cannot be manipulated. It takes place in real time and there is no need for intermediaries.
The new partnership will enable SEB to pilot the blockchain flavour developed by US fintech company Ripple. SEB has verified that the solution is compatible with the bank’s infrastructure and work is now underway to build a complete payment solution
“By using Ripple’s distributed financial technology, our customers can initiate real-time transfers between their SEB accounts in Sweden and the bank’s branch in New York,” says Paula da Silva.
The first customer transactions are planned for next year, and will offer customers real-time transfers with later cut-off times than today.
“In the next step, we plan to expand the solution to include all geographies and time zones in which we operate“.
Partnerships and standard
The first step, is an internal blockchain within SEB. In the future it is likely that networks with partner banks using the same technology will appear. Together they can build interledger connections for secure real-time payments.
“We face huge leaps in technology and many players compete to create standards that enable global solutions. It is not possible to predict who will be successful and therefore we have to experiment and try different solutions”.
Since last year, SEB is part of the Distributed Ledger Group, where some 50 international banks have joined forces in a partnership to develop common standards for the distributed ledger technology.
In August SEB, through its venture capital unit, also made an investment in Coinfiy, a Danish fintech company, which develops solutions for blockchain payments.