Australia’s three largest commercial banks – Commonwealth Bank of Australia (CBA), Westpac Banking Group, Australia & New Zealand Banking Group Ltd (ANZ) – are trialling an IBM blockchain as a new bank-guarantee platform for shopkeepers. According to a report from Reuters, the project claims to be the world’s first use of blockchain technology to process retail financing.
We’re working with @ANZ_AU @CommBank @IBMAustralia @Westpac to pilot Lygon, a #blockchain platform that digitises the bank guarantee process to make it faster, easier and safer for our #retail partners to get bank guarantees for retail leases. Read more: https://t.co/ApizBeDvOq
— Scentre Group (@ScentreGroup) July 4, 2019
The banks are conducting the trial in partnership with the Scentre Group who operate the Westfield Mall shopping centres in Australia and New Zealand.
Thirty Times Faster
Traditionally, retailers issue paper-based guarantees to their landlords promising that they will fulfil their rent obligations regardless of how their sales perform. By switching this procedure to a blockchain process, the banks told Reuters that they believe it “…could cut processing time to a day from a month and reduce the risk of fraud.”
If such time-savings and tightening of security is achieved, it is suggested that that the project will have wider implications for the Australian banking landscape.
Nigel Dobson, ANZ’s head of digital banking, whilst admitting these rent guarantees represented a relatively narrow use case, believes “…the scope to expand the product set that could be stored and maintained, managed and secured on the network is pretty significant…”
When pressed on whether Australian banks would extend this significance to launching their own cryptocurrencies, Dobson denied there were any immediate plans but ventured that “…if it made the platform more attractive, made it work faster and gave it some global scale, then we certainly wouldn’t rule out considering it in the future.”
Dobson’s modest assessment went someway to support the belief expressed last year by Australia’s Prime Minister Scott Morrison who said that “…DLT and blockchain is going to open up massive opportunities” and it will “…transform the Australian banking system.”
The World Bank is one organisation who apparently agree with those sentiments as in 2018 they chose the Commonwealth Bank of Australia to be the first to issue a global bond that was created, allocated, transferred and managed using blockchain technology.