Brazil’s largest private bank has partnered with United Kingdom bank Standard Chartered to create a blockchain-based platform for small loans, according to a press release published by Itau Tuesday, Dec. 4.
Itau Unibanco, also a major Latin American banking group, and Standard Chartered both offer international banking services. The two entities have successfully conducted a proof-of-concept (PoC) for the mentioned platform, based on Corda Connect developed by New York-based blockchain startup R3.
Moreover, Itau and Standard Chartered, joined by United States multinational financial services company Wells Fargo, have issued a club loan of $100 million to test the platform. According to the release, the points of trial contract were effectively negotiated during the experiment, and the document was then checked for compliance with the conditions set and finally signed by both parties.
Ricardo Nuno, the head of treasury department at Itau, said that blockchain technology improved the communication between the banks, which is normally comprised of 2,000 words for a similar matter, Reuters writes.
Nuno further added that the money was not actually transferred, as it was a trial, but that the platform will definitely allow for that in the future.
Germana Cruz, head of financial institutions for Latin America at Standard Chartered, told Reuters that the company might use the results of the trial to issue loans on blockchain in the region.
Global banking groups have previously used blockchain to increase the speed of syndicate loan issuance, along with cutting operational costs. In 2017, seven major international banks — including BNP Paribas, BNY Mellon, HSBC, and ING — partnered to conduct major tests in the blockchain technology-based marketplace for syndicated loans, called Fusion LenderComm and supported by R3.
Another banking giant, Spain-based Banco Bilbao Vizcaya Argentaria (BBVA), carried out a blockchain-based syndicated loan of $150 million in October. French banking group BNP Paribas and Japan’s bank holding Mitsubishi UFJ Financial Group (MUFG) also participated in the trial.