Blockchain technology continues to make inroads in the financial sector. BBVA has always been a big fan of this new technology. As of right now, the financial institution is trialing a blockchain-based solution for Letters of Credit. It is not the first time we see such a venture in the financial sector whatsoever. Reducing the time needed to verify and authorize international trade transactions is always an option worth exploring.
It is good to see BBVA further experiment with DLT. The Spanish bank has conducted several trials of this technology in recent years. Their latest pilot revolved around international trade transactions between Mexico and Spain. Right now, such transactions take up to ten days to settle. An unacceptable amount of time, yet reducing the time needed has not been easy. With this new pilot, such transfers can be completed in 2.5 hours.
Another Successful DLT Trial for BBVA
All of this is made possible thanks to a company called Wave. Their system allows for changes or corrections regarding these Letters of Credit. Moreover, the blockchain-based solution introduces electronic signing of all documents. Documents were distributed to all parties at the same time. Last but not least, the reception of the ownership of the documentation was recorded on the ledger as well. All of this was done in just two and a half hours. A major breakthrough for BBVA and the rest of the financial sector.
BBVA’s Patxi Fernandez de Troconiz comments as follows:
“The pilot we carried out with Wave represents a leap forward in improving the efficiency of international trade transactions. The time it takes to manage the documentation was reduced to a process that lasted just a few hours, in which all parties – the banks, the importer and the exporter – were constantly aware of the status of the documents.”
Although this pilot mainly focused on electronic document submission, it can suit other purposes as well.Final credit card payments, for example, can be recorded using the exact same technology. Another option revolves around prior procedures and financing of the operations in general. It is evident BBVA has high hopes for blockchain technology in the financial sector. Only time will tell if those hopes can be justified or not. This technology is still in the very early stages of development. A lot of work has yet to be done before this technology can be commercialized.
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