Lloyds Bank Concludes UK’s First Digital Promissory Note Transaction Worth £48M
Lloyds Bank has completed the first digital promissory note transaction in the U.K., which involved a £48M land purchase.
The world is shifting from using paper for business and financial operations to leveraging the beauty of digitization. This growing digital global movement speeds up operations and provides greener solutions, reducing paper use.
The Digital Negotiable Instrument Initiative (DNI) is one of the numerous initiatives to encourage the digitization of business and financial operations.
Launched by the International Trade and Forfaiting Association (ITFA), the DNI seeks to completely digitize Promissory Notes and Bills of Exchange using distributed ledger technology (DLT). Lloyds Bank, one of IFTA’s partners on the DNI initiative, just recently completed the first digital promissory note transaction, a press release from the bank disclosed.
According to the press release, the promissory note transaction saw the purchase and sale of £48M worth of land amongst several businesses in the U.K. The transaction was carried out on August 18.
To highlight one of the numerous benefits of a digital promissory note, Lloyds Bank noted that the transaction was carried out within a day instead of a week, which is the norm with traditional promissory notes.
A promissory note is a legally signed document that dictates the terms of payments to be made by a borrower to a lender at a specified period or the lender’s demand. Large entities with reputable creditworthiness use the note to take loans.
Promissory notes have been around for a long time, and, like most ancient operations, several initiatives to digitize the document have sprung up. Notwithstanding, these initiatives have failed within the U.K. due to the specifications of the Bills of Exchange Rate, which govern promissory notes. The Act specifies that notes ought to be physical entities.
Lloyd Banks devised a means to digitize promissory notes without violating the provisions of the Bills of Exchange Act. This enabled the financial institution to complete the first-ever digital promissory note transaction the U.K. has seen.
The promissory note transaction was made possible through the utilization of Enigio’s trace: original solution. The trace: original solution can be used to digitize original documents without losing their useful properties, as it leverages blockchain technology.
Lloyd Banks highlighted the significance of the development, as it noted that digital promissory notes would help make promissory note transactions safer, more convenient, faster, and more transparent. The transaction is also a step towards digitizing more transaction bills in the broader movement to digitize the trade and industry sector.
“With this successful UK-first transaction, we have delivered an innovative digital solution that is quicker, less expensive, and more secure. The digitisation and simplification of this solution finally opens this form of payment discounting to potentially millions of small businesses, improving their ability to manage their working capital and the cashflow of their suppliers by fulfilling invoices more quickly.” Gwynne Master, Managing Director of Lending and Working Capital at Lloyds Bank, remarked.
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