Banco Bilbao Vizcaya Argentaria, SA (BBVA), the Spanish banking giant became the first global bank in the world to issue a loan using blockchain technology. The bank suggests that the event will mark as a “significant advance in the evolution” in the history of blockchain. This step by the bank will also help in large scale adoption of blockchain and related services in this sector. However, the scope and future of cryptocurrencies in this ecosystem is still unclear.
The 75 million corporate loan was issued using distributed ledger technology. The entire loan sanction process was carried out on this immutable ledger, which included the negotiation of terms of the debt as well as the signing of the contract, as reported by the Financial Times. With the help of this public ledger, the updates of the entire process were available to everyone involved in the process. This technology helped everyone get authentic information about the transaction, while reducing paperwork and creating verifiable transactions.
Using the DLT technology of blockchains, the loan transaction became very simple and easy to process. Additionally, it was processed in a matter of hours. BBVA chief executive Carlos Torres Vila 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.” He also called it “significant advance in the exploitation of [distributed ledger] technology.”
The Financial Times also noted that the bank has “several more transactions in the immediate pipeline,” and it could even be planning a pilot project with a Spanish telecom giant Indra. This could help the bank become the leader of blockchain technology in the country and one of the most prominent names in Europe working on DLT.
Director financial services at Indra, Borja Ochoa, noted that the technology is “destined to become one of the technologies that will change the way we interact with products and financial services.” He also mentioned that the pilot project between the two companies “strengthens the position of BBVA and Indra as leaders in the practical application of blockchain technologies.”
In this project, the two companies will be using the Ethereum blockchain for contract negotiation. Head of global finance for corporate and investment banking Ricardo Laiseca said, “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.”
This push by BBVA suggests that traditional financial institutions are now waking up to the possibility of using innovative new technologies like blockchain to lessen their burden. These new systems have threatened the very existence of traditional banks, especially with the use of cryptocurrencies that help in making seamless global payments to any person without delays normally experienced with wire transfers. Santander Bank has also entered the blockchain domain full-fledged which could further extend its penetration in the banking industry.