Israel’s Bank Hapoalim and software giant Microsoft said Wednesday they would collaborate to set up a platform to create digital bank guarantees, based on Blockchain technology.
Blockchain technology is a leading global software platform for digital assets. Bank guarantees are a guarantee from a lending institution — like a bank — that ensures the liabilities of a debtor will be met. They enable customers to buy goods or equipment backed by the guarantee from the bank.
The cooperation with Microsoft will make Bank Hapoalim the first bank in Israel to harness Blockchain technology for the use in financial contracts, the lender said in a statement. The “pioneering project” will help make the process of signing up guarantors a simple and quicker process, the bank said — clients who require a bank guarantee today need to physically enter a branch, transfer the guarantee to the beneficiary and return it to the bank if not used.
“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.”
As part of the cooperation with Hapoalim, Microsoft will develop a new tool, using its Azure cloud platform, to test the functionality of applications that will be based on the Blockchain technology. Bank Hapoalim is also working with other entities, including the Bank of Israel, to update the regulatory requirements to enable the use of the latest technology, the statement said.
“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.”