LatinFinance - January/February 2018 - 39

LF: After doing all these tests, when
do you plan to implement the new technology in the market?
GF: That's for 2018. Our strategy is to
start using the technology for less critical
small-scale interoperability procedures to
see how it works before we use it for financial transactions.
We are a bank. We are conservative in
many ways, although the major banks in
Brazil have an innovative streak. We are
only going to implement a new technology
when we are sure of it because we're talking
about our client's money.
We are very careful about launching new
technologies, but the idea is to do something with interoperability with other banks
in the first half of 2018.
We are also talking with the central bank
to do some tests with them. The central
bank is going use blockchain a lot. It will
bring whole other dynamic to interoperability with other banks.
LF: To roll out blockchain technology, are other commercial banks in
Brazil becoming more like partners and
less like competitors?
GF: We compete in the market, in the
banking market here in Brazil, but we are
partners in regard to the standardization of
processes and technologies. When you look
at check deposits in Brazil, for example, we
got together and made it digital. The banks
win, the clients win, and in this case the
environment wins.
We are now working together to define
standards, to identify the best technology
and where we are going to apply it. Blockchain technology alone, within one financial institution, adds very little. It works
better between different organizations.
LF: Will the partnerships extend to
fintechs too?
GF: They can. We see fintechs as companies that can improve services for our

GUSTAVO FOSSE, BANCO DO BRASIL

"THIS A GRAND
EVOLUTION IN
STANDARDIZATION IN
THE BANKING SECTOR,
AND USING BLOCKCHAIN TECHNOLOGY
IS GOING TO HELP IT
IN A LOT OF WAYS"

client's bank statement. I sign an agreement
with GuiaBolso, the client authorizes access
to his data, and GuiaBolso gets it from a
transaction that I make available.
This is a grand evolution in standardization in the banking sector, and using
blockchain technology is going to help it in
a lot of ways.
I'll give you an example. When I buy a
car from someone here in Brazil, the seller
has to sign a document, which we call a
DUT, and have it authorized by a notary
public. I take the document to the DMV to
register the car. Have you thought about
doing it electronically without having to go
anywhere? The seller sends me the registration electronically, and the car is registered
in my name. But if the car has been put up

Source: Reuters

ferent types of blockchain technology. We
are also talking to public entities because
we are a mixed capital company, where the
main shareholder is the government.
At first, blockchain technology won't be
for internal use, but for interoperability
between financial institutions, or between
banks and their clients. We have a laboratory, where we run tests on performance
and scalability, but we do the tests with
other partners in Febraban and all the
member banks.

PUTTING IT TO THE TEST: Banco do Brasil has studied how to implement blockchain technology for more than a year

clients. Here in Brazil, we don't see fintechs
as competitors. We see them as partners,
as opportunities. I know there are some
countries where the banks see fintechs as
competitors. But here we are getting closer
and closer to fintechs.
We are going to use open banking technology with the fintechs. Banco do Brasil is
maybe the most advanced Brazilian bank in
terms of open banking. This will certainly
lead us to use blockchain technology, and
we have already started talking to fintechs
about this.
Open banking allows developers to access banks through [application programming interfaces]. GuiaBolso is a company
that collects all the data from a client's
various bank accounts and presents a single
vision, let's say. Open banking is like if I invite GuiaBolso to come here and look at my

as collateral for a loan, and someone tries
to sell it, the bank will know, and I won't be
able to buy it. Or if I do buy it, I'll be aware
that it is being used as collateral for a loan.
LF: What will be the benefit for corporate clients? Will blockchain technology
be an effective tool for syndicated loans?
GF: Imagine that a bank will be able to
access a client's total credit history with
other banks, with the client's authorization,
of course. When the client goes to get a loan
from another bank, the bank will know if he
paid, if he didn't pay, if he paid on time, and
it will be able to give a better credit score.
For a syndicated loan, we can already do
that with the technology that we have today
because it's a smaller volume. It's something
that can be done quickly because the technology already supports it. LF
January/February 2018 - L ATINFINA NCE.COM 39

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