ANZ and Westpac just successfully used blockchain on commercial property dealsTwo major Australian banks have successfully used blockchain, instead of paper, for bank guarantees on commercial property leasing.
ANZ and Westpac teamed with IBM and shopping centre operator Scentre Group to digitise the guarantee process.
The trial used distributed ledger technology to replace paper-based guarantee documents, resulting in a single source of information with reduced potential for fraud and increased efficiency.
The use of blockchains, used to enable the digital currency Bitcoin, means you can prove where information has come from and gone to, creating new economic activity in areas such as financial services, supply chains and government registries.
Data61, a project of Australia’s peak science organisation, the CSIRO, has been investigating how blockchain technology could be adopted in Australia to deliver productivity benefits.
The ASX is also looking at replacing its CHESS equities clearing and settlement system with blockchain.
The partners in the latest bank trial today released a whitepaper detailing how the solution worked and how it could be used in other situations relying on bank guarantees.
Here’s how it works:
Mark Bloom, chief financial officer at Scentre Group, says an update of the decades-old process for issuing, tracking and claiming on guarantees is long overdue.
“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 labour intensive process,” he says.
Nigel Dobson, the ANZ’s general manager wholesale digital, says the bank has been keen to avoid the hype surrounding blockchain and instead has focused on the practical.
“This proof of concept demonstrates how we can collaborate with our partners to develop a digital solution for customers, which also has the potential for industry-wide adoption,” he says.
Andrew McDonald, general manager corporate and institutional banking at Westpac, says the new process is about removing the cost of fraud, error and operational risk.
“Next steps involve encouraging all industry players to adopt this technology so we can better protect and save money for our customers,” he says.
“Beyond that there is no reason why this couldn’t be applied across other industries.”
At IBM, Dr Joanna Batstone, director of IBM Research Australia, says she believes blockchain can potentially drive productivity across all Australian industries.
This blockchain trial used Distributed Ledger Technology (DLT) powered by Hyperledger Fabric V1.0, a blockchain framework and one of the Hyperledger projects hosted by The Linux Foundation.
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