Banco Bilbao Vizcaya Argentaria (BBVA), Spain’s second-largest lender, has become the first banking institution in the world to issue a loan using the distributed ledger technology, according to a Financial Times report.
The loan worth €75 million ($91.33 million) was issued to one of the bank’s corporate clients and the entire process involved in the sanction of a loan – from negotiations to the signing of the loan – was done on a mutually shared distributed ledger.
Although the bank used a private blockchain for negotiations and completion of the process for the pilot project, it latter registered the complete contract on Ethereum’s public blockchain.
According to the bank, the blockchain technology has reduced the negotiation time for the loan from “days to hours”. It also called the process “significant advance in the exploitation of [distributed ledger] technology”.
Carlos Torres Vila, CEO of BBVA is very optimistic regarding the use of blockchain in the banking system. Mentioning its advantages, he 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 revealed that BBVA has “several more transactions in the immediate pipeline” apart from the pilot project with the Spanish telecom company Indra.
Indra’s Director of Financial Services Borja Ochoa said that blockchain was “destined to become one of the technologies that will change the way we interact with products and financial services” and that the pilot “strengthens the position of BBVA and Indra as leaders in the practical application of blockchain technologies”.
This is not the first time BBVA is leveraging distributed ledger technology to streamline the legacy banking services. The bank has invested significantly in developing banking processes using blockchain and is a member of the R3 consortium.
In late 2017, BBVA became the first bank to use a distributed ledger in a pilot program to automate document presentation in import-export operations between Spain and Latin America. That reduced the sending, verification, and authorization of foreign trade transaction time from 7-10 days to a mere 2.5 hours.
“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,” Ricardo Laiseca, BBVA’s Head of Global Finance for Corporate and Investment Banking, said.