The Russian subordinate of international bank, Raiffeisen, in conjunction with local state-owned oil giant Gazprom Neft have agreed to issue a bank guarantee on Blockchain, as reported by a Russian business newspaper Kommersant. Notably, other companies like ANZ, IBM, and WestPac have digitized the bank guarantee process on the blockchain.
What is the Issue of Bank Guarantee on a Blockchain?
Basically, this means that the Blockchain will be used; so, the need for paper-based bank guarantee documents will be eradicated. This will result in a single source of information with reduced potential for fraud and increased efficiency as the blockchain is both immutable, irreversible and possesses an almost uncomfortable form of transparency (which would significantly enhance the ease of auditing).
The Russian business newspaper, Kommersant, reported that the bank guarantee was issued in order to conduct a trade finance transaction which involved four parties. They include Raiffeisen, Gazprom Neft, Belarusian firm Mozyr Oil Refinery, and the Priorbank of Belarus.
The advising bank for the Russian oil company was Raiffeisen while Priorbank of Belarus issued the bank guarantee for the deal using the Blockchain. Raiffeisen developed the system used on the bank’s blockchain platform, R-Chain which was launched in 2017. The head of documentary transactions and trade finance at Raiffeisen Russia, Tatyana Ivashkova stated that;
“Four nodes participated in the transaction, that is, all parties were fully connected to the platform.”
Benefits of Blockchain in the Imminent Deal
She further stated that the traditional process would require the banks to release a guarantee through their internal system, notifying the client only after the fact. However, the adoption of the blockchain in their transactions would allow for participants to access documents simultaneously, subsequently shortening the time of processing and allowing the deal to be finalized immediately after payments have been made.
Interestingly, this is not the first time that Raiffeisen would test the blockchain. They did so by issuing an electronic mortgage using local blockchain platform Masterchain — a Russian interbank platform started up by key market players to transfer valuable information through a decentralized network. Raiffeisen has unveiled plans to connect Rosreestr, a Russian state agency that thrives on gathering data on real estate, to streamline e-mortgage issuance.
Good news has also emerged for the cryptocurrency world, and its enthusiasts as a group of major multinational oil companies, have announced the launch of a blockchain-driven platform for energy commodity trading. The decentralized network will include banks ABN Amro, ING, and Societe Generale, along with major trading houses. Operations will be fully launched by November ending in the North Sea Oil Market.