European bank BBVA issues €75 million corporate loan using blockchain technology
Blockchain digitized the entire negotiation process, reducing the need for management from days to hours.
Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) completed the world’s first end-to-end corporate loan transaction using blockchain technology, eliminating many complexities and providing a transparent process.
In an effort to streamline business operations, the European bank used distributed ledger technology (DLT) from the beginning of the deal’s negotiation to the final contract signing of the €75 million loan agreement.
The negotiation process and completion of conditions between BBVA and global consulting and technology company Indra was developed on an internal solution built on private blockchain technology (Hyperledger).
Once the contract was agreed, Ethereum’s public blockchain was used to register a unique identifier (hash) to the transaction’s documentation. BBVA says that this is how blockchain guarantees the “immutability” of the agreed contract, as any amendment in the agreed document would lead to a completely different hash.
Blockchain technology can make important improvements to this process as is demonstrated by this pilot. On one hand, DLT technology guarantees transparency and traceability of the contracting process: both Indra and BBVA were able to independently consult the status of the transaction at every stage thanks to blockchain’s traceability feature. Additionally, the solution also digitized the negotiation process, which improved the management time, reducing it from days to hours.
BBVA on blockchain’s innovative capacity to advance the entire loan procedure
The financial institution also revealed that it is currently in the midst of developing different blockchain initiatives related to international payments, international trade, and foreign exchange transactions.
Additionally, BBVA and Indra are part of a slew of international working groups – R3, Hyperledger, Enterprise Ethereum Alliance and Spain’s Alastria – examining ways to create and implement industry standards.
There is much potential for blockchain technology to reduce the costs and complexities associated with the insurance industry over the long term, according to the latest special report published by Fitch Ratings. However, the agency warns that the technology remains unproven and that greater clarity is needed to gauge the propensity for improvement and assistance, which will be revealed “over the next three to five years”.
Newly published patents released by the United States Patent and Trademark Office (USPTO) reveal that big box retailer Walmart has plans to store and secure private payments data via a blockchain-supported platform.
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