Global First: BBVA Completes Corporate Loan on Using Blockchain
There’s been no shortage of speculation on how or when blockchain would become part of the financial sector. In fact, the question was never “if” – it was always anticipated to happen. The question was simply when would the distributed ledger technology behind Bitcoin and other cryptocurrencies become viable enough for banking on a broad scale.
That starts now, as Spanish bank BBVA says it has successfully issued a €75 million corporate loan using blockchain. The pilot project, conducted with technology partner, Spanish consultancy Indra, gives Spain’s second largest banking group pride of place in the race to using blockchain in the global banking industry.
The idea is to use blockchain is to speed up the complex loan process, which has historically been a time-consuming endeavor using traditional technologies. In addition to the inherent security of a distributed ledger, a blockchain-based system provides transparency and traceability. It allows all involved parties to immediately see any updates or changes at any stage in the contract, with the time savings alone being a significant benefit.
“The solution also digitized the negotiation process, which improved the management time, reducing it from days to hours,” according to BBVA.
That kind of efficiency can have massive impacts on banking transactions.
The pilot project leveraged both private and public blockchains. Contract negotiations were done on a private blockchain, and once the agreement was in place, the contact was registered on Ethereum’s public blockchain with a unique hash, the unique identifier that guarantees immutability of the transaction. Any subsequent changes would result in a different unique hash.
For BBVA, this milestone represents only part of its blockchain initiatives. The bank is heavily invested in developing innovative solutions for its customers on the back of emerging technologies, and has blockchain projects in the works for international payments, international trade, and foreign exchange transactions, in addition to the now proven corporate load process.
“BBVA’s digital transformation continues to gather pace and reach into new areas, and this is a prime example of where disruptive technology can add real value to business processes, said Derek White, BBVA’s Global Head of Customer Solutions. “The use of blockchain in this transaction has greatly increased transparency and speed, while equally improving efficiency – it’s a win win for both us and Indra.”
Edited by Erik Linask
