Daimler AG issued a €100 million ($114.2 million) promissory note using blockchain technology, which the Mercedes-Benz manufacturer says is a first step to testing faster and more secure financial transactions across the company.
Normally, a transaction like this would take roughly 10 weeks for a bank to work as the administrative intermediary between Daimler and the investors, according to a video the company released explaining the transaction. However, with blockchain technology the process was “considerably faster” and done 100% digitally from origination and distribution to the confirmation of repayment and collection of interest payments.
“Blockchain can affect nearly the entire value chain,” said Kurt Schäfer, vice president of Daimler Treasury, in a company press release. “That’s why we, as a leading automaker, want to play an active role in the global blockchain community and help shape the cross-sector blockchain standards. We want to do this in all the areas of application that are important to us: customer relations, sales and marketing, supplier management, digital services, and financial services.”
In finance specifically, blockchain could have applications for payment transactions, securities trading, and cross-border shipment of goods, he continued.
In this case, the German bank Landesbank Baden-Württemberg (LBBW) was the main facilitator and investor along with savings banks Esslingen-Nürtingen, Ludwigsburg, and Ostalb also acting as investors. Blockchain transactions are typically done on a public basis in which anyone can invest, but this particular transaction was done privately among a select group of investors.
“This pilot project is 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,” said Bodo Uebber, member of the board of management for Daimler AG responsible for Daimler Financial Services.
In February, Daimler joined the open-sourced Hyperledger Project, which is a collaborative cross-industry effort created to advance blockchain in order to learn more about the technology. At the time Daimler had no specific plans for the technology, but this transaction is the first steps to implementing it.
Last year, Toyota Financial Services similarly joined R3CEV LLC’s blockchain consortium to explore potential applications of distributed ledger technology in auto financing.
For further explanation of the technology and Daimler’s recent transaction, watch the video below.
