According to the latest announcement, VTB, Russia’s second-largest bank, has piloted a blockchain-based system to issue bank guarantees.
VTB announced that it had provided a bank guarantee backed up by Blockchain technology to the country’s biggest mobile cellular network provider, MTS.
In the midst of several Russian banks aggressively pursuing blockchain technologies, VTB’s attempt to incorporate blockchain-based guarantees arrives.
VTB has presented a mobile cellular network provider with a commitment of 392 million rubles, which is around five million dollars for the fulfilment of payment obligations.
VTB is one of the leading banks of Russia, offering multiple banking services and products in Russia, including CIS, Europe, Asia, Africa, and the U.S.
New Integration to Offer Multiple Benefits
In favor of this new integration, Vadim Kulik, chairman of the VTB management board, stated that this new integration allows the bank to promote the issuance guarantee process and reduces paperwork substantially. According to him, the implementation of Blockchain technology also removes the chances of bank guarantees-related thefts and frauds.
Alexander Smirnov, Head of Corporate Finance at MTS, accented that the scheme of Masterchain bank guarantees would also decrease operating costs and improve competition between participating banks.
Launched in 2016, Masterchain is an Ethereum prototype supported by the Russian central bank to serve the concerns of the financial market actors. Its unique ecosystem allows connecting financial institutions and creating smart contracts in a single environment. The platform was developed by the Russian Fintech Association alongside the Bank of Russia and a few influential financial players, including Sberbank, Alfa-Bank, and others.
Although the bank has not provided the much-needed details about the development, it seems that this new integration will bring various improvements and opportunities.
Russian Banks Continues to Offer Blockchain-based Services
An announcement was made on December 1, 2020, stating that Alfa-Bank, which is one of the largest private banks in Russia, is exploring applications based on Blockchain technology to automate services for freelancers and self-employed workers.
It was reported that the bank involves the whole process of registration and payment for self-employed people, along with income registration and other add-on services.
In September 2020, it was announced that Sberbank of Russia had joined a blockchain-based platform for the purpose of commodity trade finance.
The representative mentioned that it is not anticipated that the proposal would have an immediate effect on Sberbank’s activities in Russia, but may be applied in the future.