Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The use of blockchain considerably reduced the time of entire loan process – from negotiations to signing the loan – from a few days to just a few hours.
Global banking institutions across the globe have now spear-headed the process of using the Distributed Ledger Technology (DLT) famously called the Blockchain technology for its services and products involving transactions. According to the latest Financial Times report, Spain’s second-largest banking group – Banco Bilbao Vizcaya Argentaria (BBVA) – has now become the first global bank to issue a loan using the blockchain technology.
The loan worth €75 million ($91.33 million) has been issued to one of the bank’s corporate clients and the entire process of the loan disbursement – right from to negotiations to signing the loan – has been done on the blockchain. The entire system for this trail uses two different blockchains – the public Ethereum blockchain and the private digital ledger.
The bank hailed the use of the blockchain technology as a breakthrough achievement as it significantly reduced the time of negotiations from days to a few hours. Carlos Torres Vila, BBVA chief executive said: “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.”
Carlos also revealed that the bank has several more transactions in the immediate pipeline apart from this pilot project with the Spanish telecom giant Indra.
Although the reports are sparse on the use of private blockchain, the report says that the negotiating terms between both the parties – bank and borrower – have been simultaneously recorded and updated on a mutual blockchain while keeping each other informed about each stage of the loan process.
While talking about blockchain, Indra’s Director of Financial Services Borja Ochoa said that it was “destined to become one of the technologies that will change the way we interact with products and financial services” and that the pilot “strengthens the position of BBVA and Indra as leaders in the practical application of blockchain technologies”.
This is not for the first time that BBVA is using the blockchain technology to streamline its banking services. The Spanish banking giant is a part of the R3 consortium and has invested significantly in developing the entire blockchain-based banking process. Last year at the end of 2017, the bank for the first time used the blockchain technology for yet another pilot program that was aimed at automating the document presentation for import-export operations between Latin America and Spain.
This considerably reduced the transaction time for sending, verification, and authorization of foreign trade from 7-10 days to a mere 2.5 hours. Ricardo Laiseca, BBVA’s Head of Global Finance for Corporate and Investment Banking says “BBVA is involving its clients in project processes such as requirements definition, development, and implementation. In this way, BBVA provides its customers with not only the best financial solutions but also the most advanced technical and innovative capabilities.”
Another Spanish banking giant – Banco Santander has push-forward its blockchain pursuits and has recently joined hands with blockchain startup Ripple in order to improve its services for instant global fund transfers.