A Bank in Russia, Raiffeisen Bank International partnered with three other corporate organizations. In their partnership, they were able to issue an international bank guarantee using Blockchain technology. The participants were the Raiffeisen Bank, Gazprom Neft, Belarusian Priorbank, and Mozyr Oil Refinery.
Blockchain Technology Employed Because of its Level of Transparency
A Russian news outlet announced this on Monday, stating that the reason Blockchain was selected was because of its ability to ensure transparency in bank guarantees issued. Also, it makes the process faster because all parties involved get access to the results at the same time.
Tatiana Ivashkova, the head of documentary operations and trade finance of Raiffeisenbank said;
We were finalizing the technical solution according to the wishes of our customers. There were two essential requirements: full approval by the beneficiary of the conditions of the guarantee prior to issuance and the possibility of its immediate termination, subject to the payment obligation.
Usually, bank guarantees are only issued using a paper or a SWIFT telecommunications system. As a result, the level of transparency is low because only banks have access to the guarantees. The only thing their clients are aware of is how the process took place and they may be notified by an agent via email or call. Not only does this hide the true nature of the transaction, but it also lengthens the time at which it can be completed.
Blockchain Platform R-chain Used to Issue Bank Guarantee
In the transaction, a Blockchain platform was used and it is based on R-chain distributed registry system. This is a technology that was designed by Raiffeisenbank. Tatiana Ivashkova, also noted that each of the parties had to be connected to the platform for the transaction to take place.
Shedding more light on the details of the partnership, its aim was to successfully conduct a trade between the four organizations. It was revealed that Raiffeisenbank acted as the beneficiary’s bank. Whereas, Gazprom Neft is the beneficiary whose role was to supply its goods to Belarusian MNPZ. The later is the principal bank that was tasked with the job of issuing the international bank guarantee.
A similar event is by a group of oil companies that announced its platform based Blockchain technology. The platform is expected to start operations this November and it will be used for energy commodity trading. Partnering with these oil companies are financial institutions like ABN Amro and Societe Generale.