Brazilian Lender Itaú Partners Standard Chartered To Offer Loans On Blockchain

Brazilian lender Itaú Unibanco teamed up with Standard Chartered to offer small loans, called “Club Loans,” across Latin America on a blockchain-powered platform. The two banks have successfully completed the development and proof-of-concept (PoC) for the blockchain platform.

The blockchain-powered loans platform was developed based on New York-based blockchain consortium R3’s scalable Corda Connect blockchain platform. It is claimed to be the first loan club that uses blockchain platform in Latin America.

Under the partnership, Itaú Unibanco raised $100 million from Standard Chartered and Wells Fargo through a Club Loan operation. A similar transaction was run by Itaú Unibanco and Standard Chartered in parallel to successfully conclude the development and PoC for an operation in this format on the blockchain platform.

The blockchain platform enables participants to monitor the revisions of the loan contracts, comments and sequence of approvals safely, transparently and without paper. Participants also tracked and then audited changes until the conclusion of the operation as the sequences of the modifications of the documents are preserved.

Simulations were successfully carried out for negotiation of the terms and conditions of the contract, compliance with the conditions precedent to signing in conformity with what was agreed in the previous stage and the signature itself.

The platform developed and facilitated the communication of banks in a centralized process and without the use of paper or e-mails. This has the effective potential to increase efficiency and reduce costs in the process of negotiation of the contract and in the other phases of the club loan transaction.

Blockchain is a technology that is highly resistant to data modification. Data can be added to a blockchain, but no information in it can be modified retroactively or deleted without alerting users.

The blockchain technology allows participants to upload data to a network of shared and authenticated computers, which is replicated to all participants by medium of a mechanism known as shared ledger.

The existence of the shared database avoids conflicts that may arise when several agents participate in the same transaction.

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