VTB Bank has become the first in Russia to issue a digital bank guarantee for commercial operation using the Russian blockchain platform Masterchain. A guarantee for the fulfilment of payment obligations in the amount of 392 million rubles (USD$5m) was issued in favour of the leading Russian company for the provision of digital, media and telecommunications services, MTS PJSC.
Masterchain is the first blockchain platform certified in Russia, which uses Russian means of cryptographic protection of information. The platform was developed by the Fintech Association together with the Bank of Russia and financial market participants.
“As part of its digital transformation, VTB is creating IT services that simplify and accelerate the bank’s interaction with customers. We are the first in Russia to bring our technological systems into compliance with the requirements of the Masterchain blockchain platform and launched the industrial issuance of electronic bank guarantees. This allows you to speed up the process of obtaining guarantees by the beneficiary and reduce the paper document flow. In addition, the placement of data in a distributed register eliminates the risks of fraud with bank guarantees, ” said Vadim Kulik, Deputy President and Chairman of the VTB Management Board.
Konstantin Savelyev, Head of the Documentary Business Department of the Transactional Business Department, Senior Vice President of VTB Bank, said: “VTB is constantly studying the needs of its customers and improving its products. Partnership relations between our clients and the bank, readiness to participate in the development of digital products in the Russian Federation allowed us to start using the digital bank guarantee software package this year. we are confident that this service will be the first step in creating a single digital space for documentary products in our country.”
The transaction was carried out in real-time, VTB issued a digital guarantee signed with a reinforced qualified signature, MTS accepted the document, sending a corresponding notification to the bank.
“MTS continues to introduce new innovative technologies in the field of treasury. The solution presented by the Fintech Association has a number of significant advantages since it makes it possible to safely perform operations with bank guarantees simultaneously with many participants both as a beneficiary and a principal. Account guarantees in the network “Masterchain” will allow us to consolidate information about all issued Bank guarantees in favour of MTS Group in a single system that will significantly speed up the process of issuing and receiving, reduce operating administration costs, will increase competition among participating banks, and will make the release process is completely transparent and secure,” said Director of Corporate Finance and Treasury MTS Alexander Smirnov.
The implementation of this transaction is the result of consistent joint work of VTB Bank and the Fintech Association to improve the system’s services, develop documentation and determine the essential conditions for the system’s operation.
“The Masterchain platform is a new infrastructure for the financial market that allows banks and companies to securely exchange data and conclude transactions electronically. The launch of the “Digital Bank Guarantees” service on the Masterchain is a significant step in the digitalisation of the economy and reducing transaction costs of participants in trade finance transactions. in the future, insurance and logistics companies will be able to connect to the system. We see significant interest in the service and plan to develop the Masterchain platform to work with other types of transactions within the framework of trade finance,” said Tatyana Zharkova, General Director of the Fintech Association.