Israel-based Bank Hapoalim and tech titan Microsoft are going to team up to develop a blockchain-based platform to create digital bank guarantees, The Times of Israel reported.

With this Bank Hapolim will become the first bank in Israel to explore blockchain potential for financial contracts.

“This is the first collaboration of its kind in Israel in the banking sector that will enable a digital revolution, access to advanced services and the combination of technology and business needs,” said Shelly Landsmann, the CEO of Microsoft Israel. “Microsoft is currently supporting a large number of Blockchain technologies that enable the deployment of different types of networks, depending on the system and the business needs, on the Azure cloud platform.”

A bank guarantee is a guarantee from a bank that the liabilities of a debtor will be met. Bank Hapolim said that currently clients requiring a bank guarantee need to physically go to a branch, transfer the guarantee to the beneficiary, and return it if it is not used. Using blockchain technology, the bank aims to simplify the process of signing up guarantors.

Microsoft will develop a new tool, using Azure cloud technology, to test the functionality of blockchain-based applications.

“The new process will enable Bank Hapoalim customers to receive security documents in a digital, automated and secure manner, without physically coming to the branch and in a very short process,” Hapoalim’s chief executive officer Arik Pinto said in a statement. “The use of Blockchain technology will significantly improve the customer experience and the level of trust in the banking system.”

According to the report, Bank Hapolim is also working with a number of other entities, including the Bank of Israel, to ensure regulatory compliance with regard to the use of latest technologies.

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