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IBOS member Banco Santander’s blockchain design

Blockchain integration at IBOS member bank Banco Santander.

Bank systems of today are extremely robust and secure, with security designed in. They sacrifice, however, flexibility and often user friendliness – especially when they must link with other technologies. On the other hand, banks like Banco Santander, have upgraded the API’s of core bank systems to be REST-compliant and/or support events and web sockets.

The integration of a distributed ledger technologies (DLT) platform with a core bank system should be relatively straightforward. DLT technology, network topology, architecture and security considerations remain a work in progress. For Banco Santander, the key is to minimise complexity.

John Whelan, Director of Banco Santander’s Blockchain Lab, commented:

“In the years ahead, we will move from a system of many banks with many ledgers (with all the associated reconciliation, central clearing parties, auditing, etc) to a simpler system of many banks but fewer ledgers where reconciliation is automatic. Central clearing parties may no longer be necessary and regulators will have a real-time view of the positions and risks across the industry. But this transition, if it finally happens, is going to take a long time, and the chief reason is simple: legacy bank infrastructure and the tens of billions of dollars that have already been spent on building that infrastructure.”

According to Whelan, the process starts by building a prototype to tackle a specific business problem on a particular DLT platform. It then builds a limited core bank simulator to emulate the core bank systems for that particular application.

Next, it maps out the process flow for the use case. After that comes a series of sprints over two to three months to produce an application robust enough to demonstrate to the bank’s business leaders. This may lead to to a pilot phase at Santander involving the Bank’s IT teams.

Read the full article in Enterprise Times here.