The initiative aims to facilitate transfers and schedule automatic payments. The proof of concept that began in October will last six months.

The Spanish banks Santander, Bankia, BBVA and CaixaBank announced on December 13th that they started the first sector proof of concept (PoC) to deploy an interbank platform of “smart payments,” whose objective is to enable the execution of payments through a private blockchain network.

The project includes the participation of the laboratory Grant Thornton Blockchain, which acts as a technology advisor and is coordinated by Iberpay. The latter is the Spanish company that manages the national payment system (SNCE), specialized in the exchange, compensation and settlement of operations between financial institutions.

A publication on the Iberpay website includes a graphic illustrating that the initiative aims to facilitate immediate transfers from smart contracts to execute and schedule payments automatically, offering improvements in security and traceability, as well as compliance with current regulations in this area.

The PoC began last October and is expected to last six months. It includes a pilot based on a case of fictitious business deployed in the network, which has already been implemented and has six nodes distributed and managed by each participating institution.

Proofs of Concept (PoCs) are often summarized or incomplete implementations that are applied to adapt and improve ideas so that they have a greater potential for market acceptance.

With the use of “smart payments,” the financial world could incorporate through banks other value-added services in each transaction, such as letters of credit, shipping insurance, credit protection, export insurance and logistics.

All these services are obviously available today, but they can be difficult to obtain and manage individually. In the future, banks may have the ability to automatically obtain the appropriate services and insert them into the payment transaction. This could not only make the payment faster but also make the entire transaction more efficient.

It should be remembered that banks have traditionally offered their services internally. With this type of blockchain payments, banks will have to reposition themselves as a platform or ecosystem containing all the different types of services that their customers might need. For this reason, they will need to partner with other providers, particularly emerging FinTech players.

Currently, there are some obstacles to achieving payments registered in a private blockchain, for example, using tokens or cryptocurrencies. The first is regulatory although places where commercial payments are highly regulated, such as Europe, have seen a more consistent momentum towards digitalization. Another obstacle is cybersecurity, which is another major threat in the payment industry, but digitalization offers the opportunity to introduce new tools and technologies to effectively combat these threats.

Evolving Banks

Solutions based on blockchain records have the power to revolutionize the financial and banking industry. Therefore, they could contribute to improving the scalability of payment transactions.

For some time, some financial institutions have been showing signs that they are exploring the possibilities offered by the blockchain ecosystem. They see in it the ability to allow operations in a reliable and irreversible way without the need to use an intermediary.

BBVA has expressed great interest in developing projects related to the use of networks with records in a blockchain. In fact, on its website it constantly publishes educational notes related to the ecosystem. For its part, Santander finalizes the launch of an international transfer platform. At the same time it invests and frequently announces advances related to its experimentation in the development of blockchain-based solutions. Bankia also created a laboratory in its startup accelerator, while CaixaBank participates with Telefónica in Germany in a project related to developments focused on the use of blockchains.

By Willmen Blanco

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