The three largest banks in Australia have joined tech giant IBM and Australian shopping center company Scentre Group in a blockchain venture.
The Commonwealth Bank, the Australia and New Zealand Banking Group (ANZ) and the Westpac Bank, the three largest banks in Australia, will test blockchain technology to digitize bank guarantees, a report by Reuters revealed.
In a joint statement, the three banks said that they are ‘exploring how to move away from paper-based bank guarantees to cut processing time and the risk of fraud.’ Together with the Scentre Group, they’ll test Lygon, the new blockchain-based platform on a group of retail property leasing clients in a two-month program.
While the initial efforts will focus on property leasing, blockchain technology will impact many other areas of the banking industry, Didier Van Not said in a statement. Van Not, the general manager corporate and institutional banking at Westpac, explained, “While the pilot is focused on retail property leasing, this technology has the potential to benefit many sectors and reduce the risk of fraud across billions of dollars guaranteed by the banks.”
According to sources with knowledge on the project, the use of blockchain technology could reduce the time it takes to issue a bank guarantee from up to a month to 24 hours. Speaking to tech outlet ZDNet, the sources also claimed that it will save the banks billions of dollars a year.
IBM believes that Lygon will greatly transform the banking experience for many clients. In statement, Big Blue stated, “This new, digital process increases transparency and security through the use of blockchain technology while maintaining the privacy required in such a business process.”
Lygon will be built on the IBM Blockchain platform which in turn leverages the Hyperledger Fabric, an open source platform by the Linux Foundation which counts Accenture, Daimler, Intel and SAP as some of its founding members.
The small and medium sized enterprises, which employ the largest proportion of the workforce, will be among the biggest beneficiaries of Lygon, ANZ Banking Services Lead Nigel Dobson believes.
He stated, “We are proud to have developed this platform in Australia and see truly beneficial outcomes for small-to-medium sized businesses in particular. Retailers of all sizes with physical outlets will experience radically improved bank guarantee cycle times. Additionally, retail landlords will benefit from managing their outstanding guarantees in a secure, transparent, and auditable manner.”
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