In a move that could make the process of using blockchain technology faster and cheaper, several global banks including Santander and UBS are conducting real-world trials using blockchain technology for international cross-border payments.

Technology provided by U.S. start-up Ripple to test use cases for blockchain in the real world are being used as a test case by banks such as Santander, UniCredit,  UBS, ReiseBank, CIBC, National Bank of Abu Dhabi (NBAD) and ATB Financial.

These are among the few and first banks to trial real-world use cases. So far a number of large institutions have done in-house tests of the use of the technology.

Blockchain records every transaction and stores this information on a global network so it cannot be tampered with and it works like a huge, decentralized ledger for the digital currency bitcoin. T he banks feel that areas from remittances to securities exchanges in the banking industry can make use of this technology.

Banks that are looking to make cross-border payments more efficient are the banks that Ripple wants to focus is on and provide this technology to.

It may take a few days in the current settings and banking conditions and technology to make an international payment which can also cost quite high. The technology could give banks a 33 percent reduction in their operating costs during this process, said Chris Larsen, chief executive of Ripple.

Ripple’s technology could allow banks to move money “in seconds”, he said while explaining the benefits of the technology for the banks.

“Banking now is like sending a letter, you send it you don’t know if it reached there. Ripple is more like sending an iMessage, you send it and you immediately know,” Larsen told CNBC in a phone interview.

High-volume but low-value transactions are the focus of the banks in modern day business. However since it takes a lot of effort to move the money and the percentage cut won’t be as high as for a larger transaction, such types of business and transactions can often be expensive and not profitable for the banks. With the help of blockchain technology this costs for the banks can be made potentially cheaper, says Ripple.

“Banks can send big corporate payments through existing channels or send a small payment through Ripple. They don’t have to rip out existing infrastructure, they can use Ripple to make the transactions more profitable or more efficient,” Larsen said.

Blockchain technology has caught the interest of almost all of the world’s major banks. With the aim of looking into the applications of blockchain, a consortium of banks is working together in partnership with fintech firm R3. But all the tests that have been cinduct with this technology have all been in-house. For example, using a so-called “smart contracts” and blockchain-like technology, Barclays trailed a way to trade in derivatives earlier this year.

However blockchain technologies are being brought to the real world slowly by banks.

“We recognize a lot of pain points around international payments and why there is a lot of disruption in that space and we saw an opportunity with blockchain, with Ripple, to address some of those pain points,” Ed Metzger, head of innovation technology operations at Santander U.K.

Metzger said that the results of that trial that is being conducted by Santander’s app only on it staff currently, will be used to assess whether to bring this to its customer base.

(Adapted from CNBC)

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