Promissory notes – a way of enabling large transactions using creditworthiness instead of cash – have traditionally required a physical document, and Lloyds’ transaction highlights both the friction between historical regulation and today’s digital capabilities and the massive potential to provide quicker, less-expensive, and more-secure trade finance through modernization.
On August 17, Lloyds Bank settled the sale and purchase of land worth £48 million among several UK businesses, revolutionizing a process that would have previously taken a week or more for a physical paper note to transfer between banks and notaries.
“Until now, this industry-side solution is typically slow, expensive, and administratively cumbersome,” Lloyds Bank MD Gwynne Master said in a press release. Lloyds’ successful pilot worked within existing contract law, while creating a more sustainable and affordable process, with Master adding that it “finally opens this form of payment discounting to potentially millions of small businesses.”
Lloyds worked with Enigio for its digital original documents while international law firm Sullivan and Worcester advised it on the International Trade and Forfaiting Association’s Digital Negotiable Instrument initiative.