Sberbank and Severstal considered successful a prototype of the letter of credit transaction on a blockchain

Experience recognition by successful

The prototype allowing to carry out the international letter of credit transactions with use of blockchain technology, and announced earlier by Sberbank together with PJSC Severstal was recognized successful in October, 2017. The parties carried out the full legally significant transaction in a system.

Contract supplies are planned until the end of October.

In a system full lifecycle of a letter of credit form of calculations is implemented. Application of the developed solution increases transparency of the transaction and allows to reduce implementation time.

As it was reported earlier, within a system the issue of the international letter of credit according to the delivery contract of steel with one of the Belarusian partners of PJSC Severstal is made. Sberbank acted as confirmatory bank, the role of emitting bank was played by subsidiary bank of Sberbank – JSC BPS-Sberbank.

The prototype was developed based on the Ethereum platform. Let's remind that recently Sberbank entered non-profit alliance Enterprise Ethereum Alliance (EEA), having become the first Russian bank as a part of alliance.

"Carrying out the full legally significant transaction using blockchain technology is an exit to a new stage in implementation of the latest solutions in the financial industry, including in documentary business. Unambiguously we see perspective of use of this technology and in other products of trade financing, for example, at release of bank guarantees. We already actively work on implementation of this project, including, we conduct negotiations with the interested state agencies" - the senior managing director – the director of management of trade financing and correspondence relations of Sberbank Evgeny Kravchenko commented.

Testing of a prototype

On June 1, 2017 Sberbank and the vertically integrated mining and metallurgical company PJSC Severstal signed the agreement on cooperation in the field of technology innovations. In particular, at the XXI St. Petersburg International Economic Forum the prototype allowing to carry out the international letter of credit transactions with use of blockchain technology was announced.

Within the prototype of the party developed by Sberbank tested issue of the international letter of credit according to the delivery contract of steel with one of the Belarusian partners of PJSC Severstal. Sberbank acted as confirmatory bank, the role of emitting bank was played by subsidiary bank of Sberbank – JSC BPS-Sberbank.

The uniqueness of the project consists in implementation on a blockchain of a full stroke of the international letter of credit transaction: from the moment of filing of application on the letter of credit before providing a document package on the letter of credit and trackings of the course of verification of documents. All four participants made actions in a system, and not just browsed actions of other parties. The technology allows to reduce significantly time of implementation of the transaction and to increase its transparency. This first similar solution developed in the territory of Eastern Europe.

The senior vice president of Sberbank, the head of Sberbank CIB Igor Bulantsev noted: "Sberbank among first-ever began to work on practical application of blockchain technology as we see big perspectives of use of this technology, including the international letter of credit transactions. Are sure that experience which we got in development process of a prototype will allow to bring in the future customer service quality to new level and it will be considered at creation of an ecosystem of Bank".