In what appears to be another positive stride towards the adoption of Blockchain tech, Spain’s second largest bank, Banco Bilbao Vizcaya Argentaria (BBVA), has become the first financial institution in the world to issue a loan based on the distributed ledger technology. Blockchain is the building block for digital currencies, and has the potential to transform banking processes.
According to the multinational bank, the potential of Blockchain was tested on a €75 million ($91.33 million) corporate loan. Both the bank and borrower were kept up to date on the loan’s progress through a mutually distributed ledger; from negotiating terms to signing of the loan. The results were outstanding.
The pilot project proved that processes that would normally take several days to perform could be completed in few hours, and BBVA was quick to describe the project as an “important advance in the exploitation of [distributed ledger] technology.”
Although a private blockchain was used for negotiations and the completion of the process, the complete contract was registered on Ethereum’s public blockchain. In addition to this pilot project, BBVA is developing Blockchain-based applications for international lending, trade, and foreign exchange.
On describing the success of the test and expressing optimism regarding the use of blockchain in the banking system, CEO of BBVA, Carlos Torres Vila, had this to say: “Blockchain can offer clear advantages for all sides in the corporate loan market in terms of efficiency, transparency, security. It’s another strong example of how disruptive technology can be used to add value to financial services, something that is central to our strategy.”
He also noted that the bank has “several more transactions in the immediate pipeline” apart from its project with Spanish telecom company, Indra.
It is important to note that this is not the BBVA is leveraging on blockchain to streamline banking services. The bank has invested a remarkable amount in developing blockchain-based banking processes, and is also a member of the R3 consortium.
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