Daimler AG and Landesbank Baden-Württemberg (LBBW) for the first time have jointly used blockchain technology to execute a financial transaction. The automobile manufacturer and the bank successfully tested this innovative technology for capital markets in parallel with the process that is required by regulatory authorities (for more information, look at the video). Through LBBW, Daimler launched a EUR 100m 1-year Schuldschein for which savings banks (Kreissparkasse) Esslingen-Nürtingen, Ludwigsburg and Ostalb as well as LBBW acted as lenders. The entire transaction was digitally carried out via blockchain technology in cooperation with the IT subsidiaries TSS (Daimler) and Targens (LBBW).
Blockchain – Increasing Efficiency with Digitalization
For Daimler it was "our first step in testing the wide variety of possibilities for using blockchain technology and assessing this technology’s potential for future transactions and financial processes," stated Bodo Uebber, member of the Board of Management of Daimler AG responsible for Finance & Controlling and Daimler Financial Services. Simultaneously the automobile corporation is conducting other projects to determine where blockchains could also be used to increase efficiency and support its business models.
LBBW cites similar reasons. "This pilot shows our competence at digitization of financial services for our corporate customers," states Rainer Neske, Chairman of the Board of Managing Directors of LBBW. Technical progress opens completely new ways to make financial processes simpler and more efficient. "We want to exploit this potential in order to further improve banking services for our customers." Neske also underlines a further important aspect - digitalization changed cooperation between banks and its customers. Clear demarcations disappear. Increasingly solutions are worked out together in agile interdisciplinary teams.
Potential – Syndicate Loans and Export Financing
Together with its clients, LBBW is working with its customers to develop the blockchain technology further for productive use. With its comprehensive value chain, the schuldschein product is an ideal type of application in the corporate and capital market business. Digital processes will replace labor-intensive manual steps that have been necessary for processing schuldscheins — for example during the creation of loan contracts and the examination of received payments. Daimler and LBBW expect blockchain to have similar efficiency-enhancing potential with regard to syndicated loan transactions and export financing.