Nordic bank SEB has signed a deal with San Francisco-based FinTech company, Ripple, to use its blockchain technology as a basis for payment transactions.

SEB has verified that Ripple’s solution is compatible with the bank's infrastructure and work is now underway to build a complete payment solution.

Paula da Silva, head of transaction services at SEB, said: “This is a way to explore the potential of new technologies and an example of how we, by working with innovative technology companies, can be even more relevant to our customers.”

Blockchain technology means that all parties involved in a transaction share an identical copy of a common ledger. A transaction is recorded instantaneously in both the sender’s and recipient's version of the shared document. The transaction is encrypted, cannot be manipulated, takes place in real time and there is no need for intermediaries.

The first step for the bank will be to enable its customers to make real-time transfers between SEB accounts in Stockholm and New York.

Da Silva added: “By using Ripple's distributed financial technology, our customers can initiate real-time transfers between their SEB accounts in Sweden and the bank’s branch in New York. In the next step, we plan to expand the solution to include all geographies and time zones in which we operate.”

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