Ripple Chris Larson, Ripple CEO and co-founder.

San Francisco blockchain payments company Ripple has raised $55 million (£41.7 million) from a host of major financials.

The startup raised the so-called “Series B” round — its second major injection of institutional cash — from emerging market’s focused bank Standard Chartered, consultancy Accenture, and SCB Digital Ventures, the venture arm of Siam Commercial Bank. Existing investors Santander Innoventures and CME Group also took part.

Marcus Treacher, Ripple’s global head of strategic accounts, told Business Insider: “Accenture has been very close to the company for several years now. Their investment is a major endorsement of what we do.

“The other one is Standard Chartered, they’re a big user of Ripple and their transaction banking team is very clued up on Ripple. They’re putting a lot of money into the company and doing this from a position of trust and know how rather than hope.”

Ripple is seen as one of the most exciting startups in blockchain, a new kind of database technology first developed to underpin digital currency bitcoin. Ripple has developed a protocol to let banks use blockchain tech for international money transfers, benefiting from the speed and security of the technology.

“We’re starting to put the first live payments across the network. At the moment the volumes are low but we’ve got banks that are running a pilot and also starting to run in production as well. We’re in the transition between proving this works and taking it to scale.”

Ripple’s current software, Ripple Connect, lets banks connect directly with each other and transfer money. Ripple earns money through licensing this software to the banks.

However, Ripple is also developing a new “inter-ledger” tool that will let blockchains connect with each other, allowing the financial system to become more linked.

Treacher says: “We are in a place where in my view the market will be in a year to 18 months time, our core strategy has moved on from developed closed blockchains and closed ledgers to creating the internet for exchanging value. Our view is in future more innovators working in this space will come to see as the next development.”

Alongside the investment, Ripple announced that 8 more banks have signed up to test its technology: Standard Chartered, Westpac, National Australia Bank (NAB), Mizuho Financial Group (MHFG), BMO Financial Group, Siam Commercial Bank and Shanghai Huarui Bank.

Banks that have already tested the network include Santander, UniCredit, UBS, and Royal Bank of Canada (RBC).

Ripple was founded by Chris Larson, the co-founder and former CEO of leading US peer-to-peer loans marketplace Prosper.

What is blockchain?

Blockchain is a type of database technology first developed to underpin digital currency bitcoin. Instead of one central database of who owns what, blockchain allows for a network of identical, linked databases that talk to each other and are updated simultaneously.

Every time someone wants to make a change or add something onto the blockchain (the shared database), the majority of members of the network must sign off on it. This cuts out the need for middlemen in transactions, because the fact that everyone signs off means trust is built into the system.

Here is a graphic from Goldman Sachs explaining how it works:

By cutting out middlemen, cost is reduced. The process of the group signing off on transactions should also theoretically reduce error. These two key features make it hugely attractive to banks.

Bitcoin’s original blockchain is used to record bitcoin transactions — but the tech could theoretically be used to record just about anything that involves transactions. Applications are being developed for everything from share records to art and diamonds.

Banks and financial institutions around the world are investing huge amounts of time and energy into blockchain technology, spending thousands on proof of concepts, issuing countless white papers, and joining industry-wide bodies to figure out how to use the protocol.

EXCLUSIVE FREE REPORT:

5 Top Fintech Predictions by the BI Intelligence Research Team. Get the Report Now »



Business Insider Emails & Alerts Site highlights each day to your inbox. Email Address Join

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.