Four German banks, DekaBank, dwpbank, DZ BANK and Helaba, have collaborated to create the finledger blockchain platform for promissory note loans. Promissory notes are a major instrument used in trade, where exporters grant extended credit terms to importers. The exporter usually sells the note to a bank at a discount to get faster payment.
DZ Bank is Germany’s second-largest bank by assets, though not by revenues. It’s a central organization for roughly 900 cooperative banks in Germany which own the company.
The finledger group observed that there are existing digital solutions for structuring and placing promissory notes. However, the new blockchain offering digitizes the entire process, including trade confirmation and document generation. There are plans to extend it to the full lifecycle such as assignment and termination.
“As digitisation progresses, our customers’ need for digital services has also grown considerably,” said Peter Tenbohlen, Head of Operations at DZ BANK. “Thanks to the combined expertise of four banks, we now present a new platform through which trades can be processed fully automatically.”
By halving the number of steps to generate a promissory note, and with each step taking seconds, the process is significantly faster. An additional advantage is risk reduction by authenticating participants using digital signatures. Plus there’s transparency between the parties with the current status visible to all of them.
“This is a very good example of how digitisation can improve efficiency across entire process chains while at the same time also improving the appeal of a product,” said Marion Spielmann, Head of Banking Divisions & Depository at DekaBank.
The first pilot phase was executed successfully. After the second pilot, which will involve third parties, the platform will be opened up to the rest of the industry.
Adesso AG was the technology partner on the project.
Trade finance is one of the sectors in a more advanced stage of blockchain adoption. One of the finledger members, Helaba, is also a member of trade finance consortium Marco Polo.
