Spanish bank Banco Bilbao Vizcaya Argentaria SA or BBVA, has probably become the first bank in the world to issue Blockchain technology-based corporate loans.
The solution was developed by BBVA in partnership with Spanish tech consultancy firm Indra based on distributed ledger technology or DLT.
The multinational bank has successfully completed a pilot project of issuing 75 million euros or $91 million, in corporate loans using blockchain technology.
This pilot project addressed the complete process from negotiation of terms up to the signing of the corporate loan. Even the negotiation process was digitized, which enabled speedy negotiations, reducing the process time to hours from days.
The complete process on DLT technology guarantees transparency and traceability of the contracting process, with both Indra and BBVA being able to independently consult the status of the transaction at every stage due to blockchain's traceability feature.
The use of blockchain in this transaction has greatly increased transparency and speed, while equally improving efficiency.
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 the pilot project.
This pilot represents a significant advance in the exploitation of DLT technology, combining both a private digital ledger and the public ethereum blockchain.
BBVA will utilize a private Blockchain for negotiation and processing of loans, while later it is moved onto the ethereum public blockchain for immutable record keeping.
Further, BBVA is developing different blockchain initiatives related to international payments, international trade, and foreign exchange transactions.
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