Partners report successful blockchain trial for bank guarantees
Australian financial institutions ANZ and Westpac have teamed with IBM and shopping center operator Scentre Group to digitize the bank guarantee process used for commercial property leasing.
In a successful trial of the process, the partners used distributed ledger technology powered by Hyperledger Fabric V1.0 — a blockchain framework hosted by The Linux Foundation — to eliminate the need for paper-based bank guarantee documents, resulting in a single source of information with reduced potential for fraud and increased efficiency, according to a press release.
The trial also addressed other inefficiencies in the current bank guarantee process, including the difficulties involved in tracking and reporting the status of a guarantee through multiple changes.
The project partners have a broader plan to build a shared solution with the rest of the industry, and to invite other organizations to participate in a larger pilot.
"An update of the decades-old process for issuing, tracking and claiming on guarantees is long overdue," Scentre Group CFO Mark Bloom said in the release. "With approximately 11,500 retailers across Australia and New Zealand who use guarantees to support rental obligations, manual tracking of guarantees has been an extremely cumbersome and labor intensive process."
Andrew McDonald, general manager of corporate and institutional banking at Westpac, said that the project was about removing the cost of fraud, error and operational risk inherent in manually issued, paper-based bank guarantees.
"Next steps involve encouraging all industry players to adopt this technology so we can better protect and save money for our customers," he said. "Beyond that there is no reason why this couldn't be applied across other industries."