Raiffeisen Bank, the Russian Based Bank, Issues its First Digital Mortgage Powered by Blockchain
One of the Russian Subsidiaries of Raiffeisen Bank International has made a remarkable step with mortgages this month. In a first, the bank has issued an electronic mortgage with the use of Masterchain, which is a local blockchain platform, according to a local newspaper outlet, Kommersant, which reported on this on Monday, September 24th.
The document itself contained data on the parties participating in the transaction, the credit loan involved, the duration of the mortgage, and the property that was purchased, all while these details were published in a decentralized depositary system (DDS). This same DDS is based on Masterchain, which is a Russia-based network used for transferring data via blockchain, which has been in development by a number of local banks, all led by the Central Bank of Russia since 2016.
According to the director of the IT department for Raiffeisen Russia, Andrey Popov, the document system was then verified with an electronic signature which is then sent to Rosreestr, which is a Russian state organisation involved in the collection of data within real estate, where it's then checked.
After these documents are then verified, it then provides a ‘mortgage token' which goes into file storage, which is the case for Raiffeisen Bank International.
Raiffeisen's e-mortgage is reportedly the first in the Russian market, Kommersant notes.
Rosreestr has not previously been connected to the Masterchain platform as of yet, but with negotiations being ongoing in order to bring the state regulator into blockchain are continuing to this day, this is according to Kommersant. The act of connecting the state regulator to the platform would help to accelerate the whole process of getting data on mortgage repayments, while also closing the deal without any third parties.
For Raiffeisen, in particular, the next step towards applying blockchain technology to real estate is to use blockchain to buy and sell those same contracts along with other real estate transactions. It's this factor, however, that Resreestr is behind on, considering that it remains outside of Masterchain.
Kommersant has found out that two major banks, which have otherwise remained unnamed, are also involved in the DDS system, and are planning to issue e-mortgages by the end of 2018.
Blockchain has already faced some tests as a possible solution for real estate further west, in the Netherlands, according to news outlets in June 2018 with the country's land registry expected to integrate the tech within one to three years.
It was pointed out by some, however, that major Russian banks are otherwise highly interested in the application of Cryptocurrencies and Blockchain technology, as the demand for both of them is “very high.”
In conjunction with this, the Central Bank of Russia has initially reported holding a successful Initial Coin Offering test, which was an attempt to create a working draft of relevant crypto regulation.