Key banking sector players Barclays and Royal Bank of Scotland (RBS) have jointly used the blockchain technology in a real estate transaction, where they have demonstrated key efficiency gain. The banks conducted this blockchain real estate pilot using Corda, the enterprise blockchain platform from R3.
The effort assumes significance since it caters to the question of efficiency in the real estate sector. Banking transactions in this sector also require a high degree of data privacy, therefore, the use of an enterprise blockchain makes this pilot even more important.
The real estate sector often acts as a key driver for economic growth. It’s a large sector, e.g., the real estate revenue in the US will reach $535 billion by 2022, as a Statista report indicates.
Despite the big money involved in real estate, the sector is plagued by inefficiencies. For e.g., banking transactions in this sector take considerable time, as experts state.
A large amount of paperwork, too many intermediaries, and systematic inefficiencies cause a delay in real estate-related financial transactions. The technology solutions in vogue here certainly need improvement.
Given this context, it’s not surprising the blockchain real estate use cases are increasingly attracting the interests of the stakeholders in this sector. Blockchain offers decentralization, moreover, its security features like data encryption and consensus algorithm protect data against tampering.
Blockchain smart contracts are autonomous pieces of code that are transparent, while their execution is irreversible. They can make contract administration easier.
Blockchain can reduce the number of intermediaries, and eliminate fraudulent transactions. These factors make blockchain real estate use cases increasingly important.
The importance of the Barclays/RBS pilot
Barclays, the multinational financial institution headquartered in London, and RBS, the retail baking giant headquartered in Edinburgh (Scotland) have embarked on an important pilot project. They are trying to make real estate transactions more efficient with the power of blockchain, while also addressing the data privacy concerns.
Public blockchains like Bitcoin and Ethereum are open networks, where anyone can join. While this enhances the case of decentralization and open network that blockchain had promised, these networks aren’t quite viable in heavily regulated industries.
Take the case of the financial services industry, which is subject to stringent data privacy regulations. An open blockchain network where access control isn’t possible isn’t quite the right solution for such industries.
Banking transactions, including those concerning the real estate sector need data privacy, and this is where enterprise blockchains come into picture. Enterprise blockchains enable access controls, moreover, they ensure that only the people with the right authorization can view sensitive data.
Barclays and RBS have chosen R3 Corda, also called Corda, an enterprise blockchain framework from R3. Corda offers access control, data privacy, and scalability, therefore, this open-source framework is a good fit for enterprises, especially banking and financial services institutions.
Barclays and RBS are jointly building a blockchain platform using Corda, catering to the real estate transactions. Their testing so far has already demonstrated efficiency gain. Their platform has completed transactions in less than three weeks, in comparison to the three months it would take using the current technology solutions.
A new dawn for blockchain real estate use cases?
The pilot by Barclays and RBS is delivering efficiency gain, tamper-proofing of data, and data privacy, which are key requirements in the real estate sector. Will this proposed platform transform the way the real estate sector operates? We need to wait and watch.