Nowadays it’s is not a secret for everyone involved in the cryptocurrency community that major price swings of underlying assets are calling overall market uncertainty, and therefore compromising the reputation of its operative backbone – blockchain technology. In turn, it significantly postpones a mainstream launchpad of the cutting-edge digital ledger, since considering increased level of market volatility leading global financial institutions treat blockchains with a grain of skepticism.
As the main features of blockchains are full transparency and blazing speed of transactions achieved by cutting out third parties, the decentralized technology of digital ledger represents a perfect solution for banking sector. Being lured by an advanced security layer together with a non-tampering transaction record, little by little banks have adjusted blockchains to its interior system, thus a blockchain-based payments pipeline successfully competes currently running SWIFT. On the other hand, a loan verification process becomes much faster as all required documentation has been stored in a single accessible digital ledger.
Yet it is another example of a fruitful blockchains implementation. A northern Spanish bank named Banco Bilbao Vizcaya Argentaria (BBVA) together with a global energy company Repsol have recently closed a revolving credit deal with the tools of blockchain technology. BBVA conducted the entire process of a loan worth €325 million, from the negotiation of terms to signing, on a distributed ledger.
While having a speech on the Spanish Association of Economic News Journalists (APIE) conference, Head of Strategy and Blockchain at BBVA, Alicia Pertusa marked the signed deal as a milestone on the path of further incorporation of a distributed ledger system into corporate finance, saying:
“This operation is the fruit of BBVA’s pursuit of integrating innovative and disruptive financial products for corporate clients and to offer them the best solutions that meet their needs.”
Additionally Alicia Pertusa focused on the private side of distributed ledger technology allowing financial institutions such as BBVA to take forward improvements in processes in areas such as payments, the issue of securities and international trade as well as in projects pertaining to digital transformation.
For Repsol, the accord with BBVA reaffirms its position at the vanguard of the application of innovative technologies. The Spanish energy group has earmarked blockchain as a technology with great potential and competitive edge for its new businesses. Repsol already has a lab for its lines of development in improving financial processes with added security and efficiency and advances in the supply chain and client fidelity.
The head of Blockchain and Digital Experimentation at Repsol, Nuria Ávalos said:
“Repsol wants to actively take part in collaborative environments. Blockchain is a disruptive technology that is here to stay and the agreement with BBVA advances our strategy of driving digitization in all areas of our activity.”
The solution developed by BBVA and Repsol used different types of blockchain. The negotiation between BBVA and Repsol and agreement of the conditions was developed using a private blockchain network (Hyperledger), while the signed contract was registered used the Ethereum test network (testnet) through a hash, or unique document identifier that guarantees its immutability.
Hence, a new tie-up between BBVA and Repsol will serve as an explicit pattern to the financial institutions that so far have hesitated to give blockchains a shot, and eventually this collaboration will contribute to the development of new services and customer experiences that are more rapid, transparent and competitive.