Spanish bank completes landmark loan transaction on blockchain
The promulgation of blockchain in everyday life continues with another success story. The latest evidence of its importance to commerce comes from Spain after international banking institution BBVA transacted a loan entirely across the blockchain.
BBVA used a private blockchain to conduct the loan from start to finish, according to the Financial Times. In doing so, it has now become the first global bank to enlist the technology in a loan operation. The €75-million ($91.4 million) loan, from initial negotiations to the completion of signing, was managed on a distributed ledger. Both the bank and the loan recipient were constantly updated on the progress, and the transaction time was reduced from several days to just a few hours. BBVA called it a “significant advance in the exploitation of [distributed ledger] technology.”
With this transaction successfully under its belt, BBVA is planning to conduct more blockchain-transacted loans. BBVA CEO Carlos Torres Villa was quoted by the news outlet saying, “Blockchain can offer clear advantages for all sides in the corporate loan market in terms of efficiency, transparency, [and] 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.”
BBVA had some help in managing the transaction. Spanish telecommunications company Indra assisted to make sure communications channels and equipment were always working properly. Borja Ochoa, Indra’s director of financial services, said, “This pilot served as an opportunity to take part in the first corporate loan operation based on blockchain technology in the world. The operation strengthens the position of BBVA and Indra as leaders in the practical application of blockchain technologies.”
The blockchain is the perfect solution for industrial and corporate loans, which are oftentimes more delicate and require more input from various sources and need to be kept more secure than personal loans. BBVA used a private blockchain for the transaction, but all loans will be registered and completed on the Ethereum blockchain. In addition to corporate loans, BBVA is exploring the possibility of using blockchains for international lending and trade, as well as in foreign exchange transactions.
BBVA is one of only a few global banks to proactively embrace cryptocurrency and blockchain technology. It has already made several investments into both sectors, and just a couple of months ago successfully completed trials for cross-border payments using Ripple.