Two of Australia’s four ‘big four’ banks have successfully completed a blockchain trial in digitizing the bank guarantee process for commercial property leasing.
The Australia and New Zealand Banking Group (ANZ) and competing bank Westpac have both announced the completion of a blockchain trial with technology giant IBM. The blockchain was powered by the Hyperledger Fabric, a blockchain framework developed by the open-source Hyperledger Project, notably led by the Linux Foundation.
In collaboration with shopping center operator Scentre Group, the trio conducted a trial that completely eliminated the traditional paper-intensive bank guarantee document process.
Following the successful trial, Scentre Group financial chief Mark Bloom stated:
An update on 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 processes.
Further, the working group also claimed the trial helped address other inefficiencies in the current process, including challenges in tracking and reporting of a guarantee’s status following multiple changes. The group has also published a whitepaper [PDF] detailing the process of the blockchain solution and possible applications of the technology in circumstances involving bank guarantees.
“This is about removing the cost of fraud, error and operational risk that will continue as long as bank guarantees remain paper-based and manually issued,” added Westpac’s corporate banking general manager Andrew McDonald.
Australia is gaining prominence as a hotbed for financial technologies, particularly blockchain innovation. The Reserve Bank of Australia, the country’s central bank, discreetly established an internal working group to research and understand the implications of blockchain technology. The wider remit comes from the government with its FinTech-friendly agenda that is complete with an innovative deregulatory hub for startups and companies to test their products and services.
Australia’s national standards authority is also leading the global ISO effort to introduce international industry-wide standards for blockchain technology. Standards Australia unveiled its roadmap to that end earlier this year.
More recently, researchers at the University of Sydney announced the development of a new model of a blockchain which, by their estimates, can process 440,000 transactions per second. Such a claim would see their blockchain ledger process 7 times the volume of Visa, the world’s largest payments network and 57,000 times that of Bitcoin, which handles seven transactions per second in its current state.
Featured image from Shutterstock.