Recently, Russia’s second-largest bank VTB Bank piloted a new blockchain-based system to issue bank guarantees. It is worth mentioning that, VTB Bank provided a blockchain-enabled bank guarantee to the country’s largest mobile cellular network provider MTS.
People should take into account that, the bank issued MTS a guarantee for the fulfillment of payment obligations worth 392 million rubles, or $5 million. Importantly, the commercial operation implemented Masterchain an Ethereum-based blockchain prototype backed by the Russian central bank.
Interestingly, Russia’s second-largest bank and MTS completed the transaction in real time, with Russia’s second-largest bank with VTB issuing a digital guarantee signed with a reinforced qualified signature. Notably, then MTS accepted the document, sending a corresponding notification to the bank.
Importantly, the new integration allows the bank to speed up the process of issuance guarantees as well as significantly reduces paperwork. This is not the end of the story, as blockchain deployment also eliminates the risks of fraud associated with bank guarantees.
Moreover, the Masterchain-based bank guarantees system will also reduce operational costs and increase competition among participating banks.
Blockchain platform and opportunities
Masterchain was introduced in 2016. It is the first blockchain platform certified in the Russian Federation, using local cryptographic data protection methods. It is worth mentioning that, the Russian Fintech Association alongside the Bank of Russia and major financial players developed this platform. Notably, Sberbank, Alfa-Bank, and others took part in the process.
Moreover, VTB is not alone when it comes to exploring blockchain technology. Importantly, several major Russian banks are also actively exploring technology.
Several weeks ago, another major Russian bank announced a blockchain-enabled project to automate services for freelancers. It will use blockchain-based applications to automate services for freelancers and self-employed workers. Interestingly, the bank’s new service covers the entire process of registration and remuneration for self-employed individuals. The target audience includes self-employed workers such as taxi drivers, tutors, cleaning and repair workers, and others.
People should take into account that, Alfa-Bank emerged as one of the most blockchain-friendly banks in Russia. Last month, the famous bank became the first Russian bank to join Contour. It is a DLT platform that connects the world’s financial giants like HSBC, ING, and Citi.
Moreover, several months ago, Sberbank joined a blockchain-based platform for commodity trade finance through its Swiss subsidiary. As a reminder, it is the largest bank in the country. Some of the country’s largest banks are willing to explore new technologies.