BBVA applies blockchain tech to Letters of Credit
27 November 2017 | 22283 views | 0
BBVA has applied blockchain technology from Wave to reduce the time taken to submit, verify and authorise an international trade transaction from seven to ten days, to just 2.5 hours
The pilot was run on an actual transaction between Mexico and Spain, in which Barcelona-based Frime bought more than 25 tons of frozen tuna from Pinsa Congelados, of Maztlan, México. The payment was made using a letter of credit issued by BBVA in Spain and processed by Mexican outpost Bancomer.
Patxi Fernández de Trocóniz, head of global trade & international banking, BBVA, says: “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."
Wave’s system made it possible to make changes or corrections that arose from the moment the goods were loaded until their arrival at the destination. The pilot also included the electronic signature of documents, the simultaneous distribution of copies to all parties and the reception of the ownership of the documentation at each step along the way.
"The operation was registered and securely validated at the same time for all parties, thanks to the distributed ledgers and the immutability of blockchain,” says Daniel Berenguer, BBVA's head of digital trade finance.
While the pilot focused exclusively on electronic document submission, it could equally be applied to the final credit card payment and even to the prior procedures and financing of the operations, he adds.