German multinational automotive corporation Daimler AG and Landesbank Baden-Württemberg (LBBW), a commercial banking company, have jointly utilized blockchain technology in order to execute a financial transaction.

Both the companies tested blockchain successfully for capital markets along with the process needed by regulatory authorities. Daimler launched €100 million 1 year corporate Schuldschein through LBBW, within which Esslingen-Nürtingen, Ludwigsburg and Ostalb savings banks and LBBW, acted as lenders.

“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,” Bodo Uebber, member of the Board of Management of Daimler AG responsible for Finance & Controlling and Daimler Financial Services, said. “Simultaneously with launching the Schuldschein, we conduct other projects to determine where blockchains could also be used to increase efficiency and support our business models. LBBW has been our partner for many years. It has extensive experience in this field, and its innovative projects are helping to shape the future of the financial markets.”

The entire transaction right from the origination, distribution, allocation and execution of Schuldschein loan agreement was digitally carried out using blockchain technology in cooperation with the IT subsidiaries TSS (Daimler) and Targens (LBBW).

With this blockchain pilot project, Daimler as well as LBBW wants to test the potentials of blockchain and gather know-how for the creation of new business models. LBBW is further exploring addition areas of applications. The Schuldschein product is an ideal type of application and serves as the initial point for the development of banking services in the corporate and capital market business, the release stated.

“Blockchain technology will change the role of banks as intermediaries in the economic process. We don’t want to merely observe this development; we want to proactively shape this field. The Schuldschein is especially well-suited for our entry into the use of blockchain technology. As the market leader for corporate Schuldscheine for more than a decade we have extensive expertise. In addition within this business segment we are able to generate substantial added value for our corporate customers and for investors because the process becomes more efficient and the processing time is significantly shorter,” Joachim Erdle, Head of Corporate Finance at LBBW, said.

The pilot project of Daimler and LBBW shows that blockchain will increase the automation of financial transactions so that they can be concluded much faster and more cost-efficient manner.