Spanish bank BBVA (Banco Bilbao Vizcaya Argentina) has become the first international financial institution to issue a loan using the blockchain technology, highlighting the potential of cryptocurrencies to revolutionize banking processes.
In a statement, BBVA said that it administered the entire process from negotiating to the signing for a $75 million corporate loan on a mutually distributed ledger that kept the bank and the borrower up-to-date on the loan’s progress.
The process cut the negotiation time for the loan from “days to hours” and BBVA hailed it as a “significant advance within the exploitation of [distributed ledger] technology” not simply in banking but in the way non-public and public blockchains will interact.
“Blockchain can offer clear benefits for all sides in the corporate loan market in terms of efficiency, transparency, security,” said Carlos Torres Vila, BBVA chief executive.
He mentioned that the bank already had “several additional transactions within the immediate pipeline” teaming up with Spanish telecom giants Indra which proposes to be “at the vanguard” for blockchain apps.
Borja Ochoa, Indra’s director of financial services, said blockchain was “destined to become one of the technologies that will change the way we interact with products and monetary services” and that the pilot “strengthens the position of BBVA and Indra as leaders in the application of blockchain technologies.”
The completed contract was registered on Ethereum’s public blockchain after a private blockchain was used till the completion of the trial.
Since discovery, blockchain is being considered as one of the most promising fintech theme for banks and consists of a broad vary of applications across payments, clearing and settlement, trade finance and loaning.
Blockchain shows additional potential in the corporate and syndicate loaning as compared to the consumer loans as they are more complex and the records have to be analyzed by a number of individuals than the one borrower who is generally involved.
“BBVA is involving its clients in project processes such as requirements definition, development and implementation,” said Ricardo Laiseca, BBVA’s head of global finance for corporate and investment banking. “In this way, BBVA provides its customers with not only the best financial solutions, but also the most advanced technical and innovative capabilities.”
BBVA has been actively engaged on blockchain initiatives for international payments, trade and foreign exchange. BBVA’s executive chairman Francisco Gonzales has been a passionate driving force and avid adopter of the latest technologies and business models. They have also invested in a range of latest ventures including UK’s Atom Bank and Germany’s solarisBank.
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