Sberbank and Severstal, the vertically integrated mining and metallurgical company, have announced collaboration in technological innovation. This year at the 11th St. Petersburg International Economic Forum Severstal and Sberbank presented their latest prototype, which would enable the secure transfer of international letters of credit using blockchain technology.
During the demonstration, the companies tested the prototype by issuing an international letter of credit for a contract for the supply of steel with one of Severstal’s Belarusian subsidiaries. Sberbank acted as the confirming bank, and BPS-Sberbank, a subsidiary of Sberbank, was the issuer.
This project involves the end-to-end processing of an international letter of credit through blockchain technology, including submission of the application for a letter of credit, provision of the package of documents relating to the letter of credit and monitoring the progress of the document verification. In addition, all four participants involved in the transaction are also able to view the progress made by the other parties throughout every step of the process. The technology significantly reduces the timeframe of the transaction and increases transparency. This is the first service of its kind developed in Eastern Europe.
Igor Bulantsev, Senior vice president of Sberbank and head of Sberbank CIB, said: “Sberbank is one of the first companies in the world to work on the practical application of blockchain technology. We see great potential in this technology, including its use for international credit transactions. We are confident that the experience, which we have gained through the prototype development process, will enable us to improve the quality of customer service, which is a key consideration in developing the bank’s infrastructure”.
Alexey Kulichenko, Chief Financial Officer of Severstal, commented: “Severstal is constantly exploring new opportunities to improve business performance including through technological innovation. Using blockchain technology in the financial sector simplifies document circulation, increases the transparency of processes and reduces the time and financial costs for the company – in this case, on letters of credit.” (Severstal/Ukrainian metal)