Spanish banking giant BBVA is laying claim to be the first global bank to issue a loan using blockchain technology by completing a pilot of the entire issuance process on not one, but two blockchains.
As Spain’s second-biggest lender, BBVA has been exploring and launching blockchain applications in core banking processes and has now successfully completed a pilot involving the entire process of issuing a €75m ($91 million) corporate loan on two differing blockchains, the Financial Times reported Thursday.
The use of blockchain technology cut down loan negotiation time from “days to hours”, BBVA said. Notably, the bank revealed the use of a private blockchain for the negotiation and completion of the loan before registering it as a completed contract on the public Ethereum blockchain for immutability.
BBVA underlined the successful pilot as a “significant advance in the exploitation of [blockchain technology]” in the way both private and public blockchains can interact within and beyond the banking space.
While details are scarce on the private blockchain used, the report confirms that both parties’ – the bank and the borrower – negotiating terms were simultaneously recorded and updated on the mutual blockchain to keep each other abreast of the loan’s progress.
As quoted by FT, BBVA chief executive Carlos Torres Vila stated:
Blockchain can offer clear advantages for all sides in the corporate loan market in terms of efficiency, transparency, security. It’s another example of how disruptive technology can be used to add value to financial services, something that is central to our strategy.
BBVA’s latest implementation of blockchain tech follows a previous trial wherein the bank used crypto startup Ripple’s blockchain in a successful real-world money remittance pilot between Spain and Mexico. The pilot saw 50-euro-denominated payments from Spain to Mexico in a matter of seconds, compared to traditional banking wires that take up to 4 days.
Featured image from Shutterstock.
Follow us on Telegram.