Spanish Bank BBVA is First to Issue a loan Using Blockchain Technology
The leading Spanish bank BBVA is reported to have registered a $91 million loan on the public Ethereum blockchain making it the first international bank to give out a loan using blockchain technology. The initiative was aimed at completing a test of the complete issuance process involving two blockchain systems.
Being the second-largest Spanish lender, BBVA has been trying out and launching blockchain applications in key banking processes and has effectively completed a test relating to the complete process of delivering a €75m ($91 million) corporate loan on two different blockchain systems.
According to the BBVA, making use of the blockchain technology narrowed down the transaction period from “days to hours.” The bank went on to explain that it made use of a private blockchain for the process of completing a loan before registering it as a completed contract on the public Ethereum blockchain.
BBVA indicated the successful test as a “significant advance in the exploitation of [blockchain technology]” signifying both private and public blockchain systems can relate in and out of the banking environment.
Even though there is very little information on the private blockchain used, there are reports that both the bank and the borrower’s negotiating terms were recorded at once and updated on the mutual blockchain to keep both parties updated of the loans’ progress.
As explained by FT, BBVA chief executive Carlos Torres Vila: “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.”
The success test for the bank comes after a previous test was made where the bank used crypto startup Ripple’s blockchain in a successful real world money remittance transaction between Spain and Mexico. The test saw 50-euro-denominated payments from Spain to Mexico within a matter of seconds, compared to banking processes that take up to 4 days.