Spain’s second-largest lender, BBVA, in collaboration with Wave, has launched a blockchain-based pilot program to automate document presentation in import-export operations between Spain and Latin America.
The efficiency of blockchain technology reduces the sending, verification, and authorization of foreign trade transaction time from 7-10 days to a mere 2.5 hours.
Under the pilot program, a real sale operation was conducted between Mexico and Spain, in which a company named Frime, located in Barcelona, purchased more than 25 tons of frozen tuna from Pinsa Congelados, a Mazatlán company (Mexico). The operation was carried out through a letter of credit, the most traditional payment system in international trade operations, issued by BBVA Spain and paid by BBVA Bancomer.
As explained by the financial institution, the large amount of documentation required by a letter of credit involves a series of processes that in most cases involve manual checks and the sending of physical documents. When unavoidable errors are taken into account, this process can extend to almost two weeks.
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BBVA’s global trade and international banking head, Patxi Fernández de Trocóniz, said: “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 blockchain platform also allows changes and correction in the documentation until the arrival of the shipment in the destination. It introduces electronic signatures, simultaneous distribution of copies to all necessary parties, and the generation of ‘receipt of ownership’ of the documentation at every step of the supply chain.
The introduction of blockchain technology in such a massive supply chain has not only reduced the cost of operations, but also made them more transparent and reduced operational risks.
Daniel Berenguer, BBVA’s head of digital trade finance, said: “The operation was registered and securely validated at the same time for all parties, thanks to the distributed ledgers and the immutability of blockchain.”
BBVA is testing the incorporation of the blockchain system in various areas of its operation. Apart from this pilot project with Wave, BBVA is also carrying out blockchain-based forex exchange processes with Ripple. BBVA is part of the main consortiums working on the development of platforms and concept tests linked to blockchain technology, such as R3, Hyperledger, Enterprise Ethereum Alliance and Alastria.