BBVA Seeks Blockchain corporate loan of $117million From Engineering Company ACS Group
In a first of its kind, the Spanish multinational bank, Banco Bilbao Vizcaya Argentaria (BBVA) drew an agreement with engineering company ACS Group for $1 million corporate blockchain-run loans for the long term.
The loan contract will boost the efficiency of both companies and bring in transparency as well as traceability of contractual processes. This is a pilot contract and will bring about the digitization of negotiating processes as companies are able to break down the time taken for this purpose to a few hours from earlier processes which consumed days at a stretch.
Blockchain for Digitized Negotiations
Blockchain loan has been an event waiting to happen, as financial systems were aware of the technology for such type of loans. The bilateral loan is an improvement over the regular methods that financial systems have used, largely because it will allow the concerned parties to study and consider the stages of the loan independent of each other.
BBVA an Argentinean bank, given its multinational background, has been exploring technology-based smart contracts to give it an impetus as the world transits to the digitized economy. The experimental explorations of the bank show that there is an avenue to introduce the concept of blockchain technology to help in improving the transaction processes of the bank, loan taking services, and similar functionalities.
The latest bilateral loan with ACS Group is a pilot program and has set up BBVA as one of the first recognized financial institutions to implement blockchain for purposes of receiving corporate loans.
The first of this genre of loan taking was conducted in April 2018, when BBVA obtained the ‘first global corporate loan transaction,’ by using blockchain technology with an Information Technology company named Indra, with core operations in Spain.
Apart from the corporate loans the company has been obtaining with the use of blockchain technology, BBV has other firsts’ as well. In June it explored an agreement with a company in the oil and gas industry, Repsol, to seek new credit line to the value of $377 million. This agreement worked out to be the first of its kind of blockchain technology in financing spectrum between corporate.
The banking company straddling different geographies and multiple banking systems in the countries it operates has been able to identify blockchain technology as the primary platform for its various operations. The key aspect to be recognized with BBVA is its willingness to adapt to new technologies to essentially bring in efficiency in terms of the contract. Additionally, by using the blockchain technology, it is applying the Distributed Ledger Technology (DLT) for purposes of processing as well as handling of shipping documents for submissions. According to the CEO, Carlos Torres, the claim by blockchain is yet to ‘mature’ as an industry did create obstacles for its adoption.
The vision behind adopting this method of banking process, according to Torres is to be prepared for the transition when ‘maturity’ arrives at the blockchain system and regulators are ready for the system. The introduction of these tools at this stage will give BBVA the necessary leverage to add productivity and efficiency to banking processes for its clients.