BV Bank, a Brazilian bank operating in the car loan market, is currently running a pilot program using tokenization in the process of financing vehicle purchases. The first phase of testing involves automating car sales processes.
BV Bank and tokenization
BV Bank announced that it is testing a tokenization system to automate car financing processes. The experiment, conducted together with Consensys and Parfin, smart contract providers and designers, will help assess the benefits of using tokenized assets when purchasing a car.
The first phase of the test involves using tokenized money and a digital car ownership certificate to speed up the purchase transaction. In other words, the entire transaction of financing the purchase of a car will take place on the blockchain.
Importantly, BV Bank's future potential tokenization platform is expected to enable the use of the planned digital currency of the Central Bank of Brazil (CBDC).
All this may seem insignificant, but it is only appearances. Brazil is the sixth largest car market in the world, with over 10 million vehicles sold in 2023 (new and used cars).
Carlos Bonetti, Executive Director of Risk and Operations at BV Bank, said:
The idea is that the bank is responsible for carrying out the entire financing operation, from simulation to lien waiver and finalization of the vehicle sale.
Bonetti also emphasized that the transparency this new system offers to the parties involved in the transaction will reduce operational and financial risks. He added that once implemented, it would provide “numerous customer service benefits, including the ability to settle the amount due immediately and operational simplification.”
Blockchain in the automotive industry
It is worth adding that blockchain has wider applications in the automotive industry.
For example, in 2018, BMW started cooperation with the blockchain start-up DOVU. The goal was to collect data from leasing car users about the condition of the vehicles or the car's behavior in given situations. In exchange for information provided to BMW, drivers were rewarded with tokens.
Five years ago, the Mobility Open Blockchain Initiative (MOBI) was also established. In practice, it is a coalition of BMW, Ford, General Motors, Renault, Bosch, ZF, Accenture, IBM and startups that specialize in blockchain technology.
