Through LBBW, Daimler launched a €100-million, 1-year corporate Schuldschein (private placement instruments written under German law) within which savings banks (Kreissparkasse) Esslingen-Nürtingen, Ludwigsburg and Ostalb as well as LBBW acted as lenders. The entire transaction—from the origination, distribution, allocation and execution of the Schuldschein loan agreement to the confirmation of repayment and of interest payments—was digitally carried out via blockchain technology in cooperation with the IT subsidiaries TSS (Daimler) and Targens (LBBW).

This pilot project is our first step in testing the wide variety of possibilities for using blockchain technology and assessing this technology’s potential for future transactions and financial processes. Simultaneously with launching the Schuldschein, we conduct other projects to determine where blockchains could also be used to increase efficiency and support our business models. LBBW has been our partner for many years. It has extensive experience in this field, and its innovative projects are helping to shape the future of the financial markets.

—Bodo Uebber, member of the Board of Management of Daimler AG responsible for Finance & Controlling and Daimler Financial Services

Blockchain can affect nearly the entire value chain. That’s why we, as a leading automaker, want to play an active role in the global blockchain community and help shape the cross-sector blockchain standards. We want to do this in all the areas of application that are important to us: customer relations, sales and marketing, supplier management, digital services, and financial services.

—Kurt Schäfer, Vice President Daimler Treasury

Other possible applications of blockchain technology in the financial sector include payment transactions, the securities trade, and the cross-border shipment of goods.

By means of this pilot project, Daimler as well as LBBW want to thoroughly test the potential of blockchain early on and gather know-how for the creation of new business models. Moreover, Daimler implements an open-source culture, actively shapes the future of the “Internet of Values”, and gains access to talented individuals and innovations as an active partner in the global technology and startup environment.

The joint pilot project of Daimler and LBBW clearly shows that financing parties interact more intensively these days and that the roles of various players in the market change. Blockchain will increase the automation of financial transactions so that they can be concluded much faster and more cost-efficient than in the past. As a result, digital processes will replace labor-intensive manual steps that are so far necessary for processing Schuldscheindarlehen—for example during the creation of loan contracts and the examination of received payments. Daimler and LBBW expect blockchain to have similar efficiency-enhancing potential with regard to syndicated loan transactions and export financing.

Blockchain technology makes it possible to conduct direct and secure financial transactions worldwide within seconds. In this technology, blocks of digital data are decentrally saved on several servers. The transactions also receive a cryptographic signature that makes it much harder to manipulate them.