BBVA are considered to be one of the biggest lenders in Spain, suggesting that this move is not just a short experiment, it at least suggests that BBVA are looking to integrate blockchain into their services sooner, rather than later.
This loan of course is not a typical loan, reports suggest that is is actually worth around $91.33Million and involves BBVA loaning funds to a corporate client, the true nature of this is yet to be confirmed but we do know that blockchain technology was used throughout the loan process, from price negotiations to officially signing the contracts and transferring the funds.
By using blockchain technology, loans of such high value are offered a great deal of protection. The blockchain can host contracts and evidence and can also be used to monitor the status of the loan, including repayment dates and schedules. Overall, this puts both parties in a much safer position. Likewise though, this technology can be adopted by the facilitation of smaller, less significant loans too.
Carlos Torres Vila, CEO of BBVA has 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.” Moreover BBVA confirm: “several more transactions in the immediate pipeline.”
This sort of technology not only secures the status of loan payments and repayments but also speeds up the process in which negotiations take place, and, also digitalises the contract process. When loans are detailed, numerous meetings and discussions usually take place which can generally be a very time consuming process. Using blockchain technology means all of this can happen remotely and instantly. This means then that potentially, banks like BBVA can increase the amount of loans they offer, on a corporate level, simply because the time is usually takes is compressed and therefore, it becomes a more economically viable project.
This payment did use a private blockchain initially, however the data has now been transferred to the public Ethereum blockchain, ensuring the transparency that the crypto-community demands.
Overall this is a very promising move. As BBVA adapt this technology and this service, their customers will be exposed to an emerging technology that in theory, other banking groups should start taking advantage of, should the roll out of this service prove to be successful.
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