How a Russian Bank Issued Electronic Mortgage on a Blockchain

Blockchain technology is finding more use cases after a Russian subsidiary of Raiffeisen Bank International issued an electronic mortgage with the aid of a local blockchain platform, Masterchain.

Masterchain is a Russian network for transferring valuable data over the blockchain. The Central Bank of Russia is developing the solution in partnership with other major local banks since 2016.

The latest trial by Raiffeisen Bank is the first attempt to run an e-mortgage over the local blockchain network, and it was successful. Local newspaper Kommersant shared insights into how the operation was carried out.

First, the document containing data about the parties in the transaction, the credit loan and its duration, and the property purchased was published in a decentralized depositary system (DDS). The documents which have been verified with an electronic signature were then sent to Rosreestr — the Russian state agency collecting data on real estate.

Kommersant also went on the reveal that the agency has not been added as a node on the blockchain even though plans are currently ongoing in this regard. However, After the verification, a “mortgage token” will go into file storage, which in this case is Raiffeisen Bank.

Benefits Of A Bank Issuing Mortgage Over A Blockchain

If the connection process being eyed by Raiffeisen Bank is completed, then it will accelerate the process of getting data on mortgage repayment and closing the deal without third parties. Also, the use of blockchain will increase the security of data storage as well as reduce the operating costs of depositories.

Anna Zaitseva, General Director of DK Region (another company involved in the trial) pointed out another benefit.

“The joint participation of depositaries in the DDS project allowed the market to agree on a single format for transferring orders, reporting, etc., which significantly facilitates all processes to member banks, regardless of which depository they chose for the service.”

For the time being, discussions to include the Rosreestr on the network is in progress according to Kommersant. Also, two unnamed Russian banks are gearing up to trial issuing of a mortgage over a blockchain.

How this will turn is worth keeping an eye out on. However, what are your thoughts about this unique application of blockchain technology?



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