Four Team For Blockchain Bank Guarantee

Announcements, Blockchain, Group, Innovation | July 11, 2017 By:

ANZ, Westpac, IBM and shopping center operator Scentre Group have completed a blockchain trial for the bank guarantee process used in commercial property leasing.

The trial utilized the Linux Foundation’s Hyperledger Fabric V1.0 in order to eliminate the need for current paper-based bank guarantee documents, resulting in a “single source of information with reduced potential for fraud and increased efficiency.”

The trial also addressed other inefficiencies in the current bank guarantee process, including the challenges in tracking and reporting of a guarantee’s status through multiple changes.

The trial involved a blockchain between a tenant, landlord, and bank. Instead of issuing a paper guarantee, the bank would create a new entry on the shared ledger that represents a “digital guarantee.”

The existence of this guarantee would be immediately visible to both the tenant and the landlord, who would in turn carry out the process that would normally be triggered by the receipt of a paper guarantee.

Scentre Group CFO Mark Bloom said blockchain has the potential to address a major pain-point. “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.”

Both ANZ and Westpac believe the approach has the potential for industry-wide adoption, with the next step to invite other organizations to participate in a larger pilot.

“We have been keen to avoid the hype surrounding blockchain and distributed ledger technologies, and instead focused on practical and deliverable use cases,” said Nigel Dobson, General Manager Wholesale Digital, Digital Banking at ANZ. “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.”

“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,” said Andrew McDonald, General Manager Corporate and Institutional Banking at Westpac. “Next steps involve encouraging all industry players to adopt this technology so we can better protect and save money for our customers. Beyond that, there is no reason why this couldn’t be applied across other industries.”