Royal Bank of Scotland, Barclays Integrate Blockchain to Improve the Real Estate Transaction Process
It was recently revealed that Barclays together with the Royal Bank of Scotland (RBS) were attempting to speed up transactions in the real estate sector.
Together with R3, a software company they selected a blockchain project and successfully put it to test. In mind they envision “fast and transparent” operations for all the users.
Barclays and RBS’s solution to market needs
John Stecher, the Managing Director at Barclays Investment Bank argues that today’s transactions are slow, expensive and sometimes paperwork is complex. He adds that all this combined together with a lot of time wasted when different parties have to meet may lead to errors, delays and eventually increased transaction costs.
To solve this, the two banks proposed a system that allows participants to control their data as well as directly conduct their transaction test conducted over 5 days revealed that blockchain can finish up a 3 month transaction process in less than 3 weeks.
The Director of mortgage innovations at RBS, Dan Salmons says that there is potential for such a network to improve customer speed and transparency while reducing costs, this coming as a result of R3 bringing representatives of all key parties in the project together. These parties are Squirre Patton Boggs, Ashurst and Clifford Chance.
Blockchain applications in real estate sector
- Transaction registries and property rights- Distributed registries can be used to record information such as registration of property rights and transactions.
- Construction data storage and analytics- Developers can comfortably make a multi-million dollar decision with help of accurate location data.
- Voting- Major decisions like repairs and landscaping of the local are often made through a vote.
As much as there are clear advantages like cost reduction, critics and questions still remain regarding implementation of such solutions. One is considering the large computing power needed to implement it which might not be accessible to other companies. On top of this regulatory issues still remain unresolved. Others still think it’s not a must to have blockchain in order to speed up transaction processes.
Another critic is the big question of how banks, once blockchains biggest critic happened to change their attitude and suddenly turn partner. JP Morgan CEO Jamie Dimon is also cited saying that Bitcoin is “a fraud” and will eventually blow up.
Despite Spanos suggesting that blockchain startups have nothing to worry of, the sudden turnaround in banks initiative to use blockchain can negatively affect blockchain projects developing real estate.