Barclays has revealed it will be working with Bitcoin tech company Safello to see how blockchain technology can be used to transform traditional banking practices.
Safello operates an online exchange for Bitcoin using blockchain - a technology that underpins the way the virtual currency works. By monitoring who is paying who and keeping a record of the transactions, it can ensure that coins can only be spent once and ensures transfers continue without regulation.
Blockchain technology has the potential to make transactions faster and cheaper as banks have to deal with antiquated systems that aren't necessarily compatible across different banks in different countries. Furthermore, it may also help Barclays customers make transfers easily, avoiding the hiccups associated with some payments, especially international ones.
Derek White, chief design and digital officer, Barclays, said: "At Barclays, we're embracing the digital revolution, exploring innovations early on so that we can help to shape their development and co-create the future of financial services with these startups."
Other banks are also investigating into the use of blockchain technology to make transfers more efficient. Indeed, UBS, Santander and commercial bank Goldman Sachs have all set up trials around the technology. Nasdaq is also looking at using the tech for shares dealing.
However, because the financial sector is so heavily regulated to prevent fraud, it's unlikely the technology will be approved for wider use until more research and insight deems it fit for purpose.
Safello was one of 10 companies Barclays mentored over 13 weeks as part of its fintech (financial technology) programme, which seeks to find the hottest new companies in the field. Other companies involved in the programme are cyber security company Post Quantum and virtual games maker Stockfuse, which could be integrating its Global Market Insight Game into Barclays' recruitment campaigns later this year.
