While banks are generally steering clear of bitcoin and other crypto-currencies, they are investing millions of dollars exploring how the underlying blockchain technology could make areas of financial services more efficient. Here is one new use case.

Credit Suisse and ING have completed a €25 million ($30.4 million) securities lending transaction using blockchain-powered software, demonstrating another use case for the technology behind crypto-currencies.

The banks were able to swap baskets of securities using an application that utilises a blockchain variant developed by R3, the bank and technology consortium. 

The trade was a real-life example of how blockchain could streamline processes in capital markets. Put simply, a blockchain is a virtual distributed ledger of transactions shared peer-to-peer that can record ownership across a public network of computers rendered tamper-proof by advanced cryptography.

“This was far more than a proof of concept in a fenced lab,” Charley Cooper, a managing director at R3, said in an interview with Reuters. “These are regulated institutions in a real market and it is a unique demonstration that blockchain solutions are being deployed in commercial settings.”

The companies expect the application to be live by the end of this year, Herve Francois, a blockchain initiative lead at ING, said.

Using blockchain could help make the securities lending process faster and more capital efficient, the banks said.

In a typical securities lending trade, the underlying securities are transferred between accounts in a process which can take days. With the blockchain application used by the banks the settlement is instantaneous, the companies said.

“The platform gives us an opportunity to make balance sheet and capital usage much more efficient and timely,” Emmanuel Aidoo, head of distributed ledger and blockchain strategy at Credit Suisse, said.