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OtherStaff WriterMon 10 Jul 17

Bank Guarantees Now Digitised After Successful Blockchain Trial

iStock-521690360_620x380

The bank guarantee process used for commercial property leasing has been successfully digitised, ironing-out current inefficiencies in the current bank guarantee process.

ANZ and Westpac teamed with IBM and shopping centre operator Scentre Group to trial Distributed Ledger Technology (DLT) in order to eliminate the need for current paper-based bank guarantee documents.

Their result was a new single source of digital information with reduced potential for fraud and increased efficiency.

In addition to eliminating the need for physical document management, 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.

This forms part of a broader plan to build a shared solution with the rest of the industry, and to invite other organisations to participate in a larger pilot.

Scentre Group Chief Financial Officer Mark Bloom said an update of the decades-old process for issuing, tracking and claiming on guarantees was 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 said.

ANZ Digital Banking General Manager Nigel Dobson said they were keen to avoid the hype surrounding blockchain and distributed ledger technologies, and instead focused on practical and deliverable use cases.

“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.”

The motivation was centred around a need to remove the cost of fraud, error and operational risk that was expected to continue as long as bank guarantees remained paper-based and manually issued.

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.

The partners involved in the trial also released a white paper detailing how the solution worked and how it could be used in other situations that rely on bank guarantees.

OtherRetailOfficeAustraliaFinanceTechnologyReal EstateSector
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Article originally posted at: https://theurbandeveloper.com/articles/bank-guarantees-now-digitised-successful-blockchain-trial