Barclays To Explore Blockchain Tech

Safello, a Swedish-based bitcoin exchange, recently announced that it has signed a Proof of Concept (PoC) agreement with Barclays to explore how the financial services industry can benefit from blockchain technology. The deal was one of the highlights of the Barclays Accelerator Demo Day hosted in London on June 22nd.

“Today is about celebrating the successes, partnership and an exciting future with some of the leading startups in the fintech ecosystem right now. 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.”
— – Derek White, Barclays Chief Design and Digital Officer

The Barclays Accelerator, run by Techstars, is a startup program designed to support new businesses in delivering their breakthrough innovations in Fintech. Techstars is a seed funding company passionate about promising entrepreneurs and fintech start-ups. In exchange for Techstars support, and £20,000 is seed funding, the young companies will provide a 7-10% equity stake.

Safello is one of ten companies that showcased their Fintech solutions at the event. An audience of more than 400 entrepreneurs, executives, and corporate partners heard how the startups plan to help their businesses and contribute to shape the future of financial services. Seven out of the ten companies are currently exploring opportunities with Barclays.

This represents the first PoC that a UK high street bank has announced with a bitcoin business. The Stockholm-based exchange supports 32 countries in Europe with direct payments and other payments such as SEPA, Faster Payments, Bankgiro, Swish and International Wire. Safello has already enrolled more than 20,000 users in Europe.

“Safello has always been on the forefront of cooperation with the traditional financial players. This solidifies this direction in a major way and it serves as an open invitation to other traditional financial players that are looking at blockchain. In that sense, there is no greater validation than doing a proof of concept with Barclays.”
— – Frank Schuil, Safello CEO and Co-Founder

Post-Quantum, a cyber security startup, has also signed a contract which will see an implementation of its technology at the bank. Stockfuse, a virtual stock trading game platform, is in talks to become an integral part of the bank’s graduate recruitment drive with a Global Market Insight Game to be launched later this year.

Barclays and Safello will work together to develop a payment platform that accepts bitcoins. At the PoC stage, the platform will only facilitate donations to charities, but the range of services offered could be expanded if trials go well.

“There is a good understanding that blockchain technologies provide a frictionless and low-cost platform of international payments and beyond. The adoption of these technologies will go through different phases. At first as a way to optimize existing operations, but over time as a complete new infrastructure to handle all kinds of financial transactions and p2p interactions.”
— – Schuil

Inspired by the success of the event, Barclays announced its intentions of running more programs to bring the best fintech startups to light. Together with Techstars they will start a Barclays Accelerator program next July in New York.

Banks have generally steered well clear from bitcoin, in spite of its fairly rapid growth in popularity and use. There have been several challenges for banks interested in the digital currency; unclear regulatory regimes, ties to unlawful activities, as well as the high reporting standards imposed on financial institutions.

On the other end some governments have been slowly warming up to bitcoin, the UK, Germany, France, Italy, Spain, Switzerland, and Finland have even made its transactions VAT exempt. Those who aren’t welcoming it are, for the moment, mostly remaining indecisive.

Barclays’ deal was a well received surprise for many, and in the future we could see such announcements on a regular basis as more financial institutions engage with bitcoin while demand for it grows. For many bitcoin users, increased adoption could feel like a dream come true.

However, as the digital currency gets closer to mainstream adoption, pressure for regulation and oversight could also increase. Elliptic, a UK based fintech firm, recently announced “The Bitcoin Big Bang” a blockchain visualization tool that would allow banks to track down whether bitcoins originate from proceeds of illegal activity. These kind of developments could threaten the much beloved pseudonymous and “above the law” nature of bitcoin.