Three of Australia's largest banks, ANZ, Commonwealth Bank of Australia (CBA) and Westpac, have formed a company with Westfield Shopping Center operator Scentre and IBM to build a block-based bank guarantee platform.
Named Lygon, that platform will "transform the way businesses achieve and manage bank guarantees".
Normally, bank guarantees are issued – often required as part of a property lease – manually on paper. The process can take up to a month and is at risk of error and fraud.
"Bank guarantees are an important part of our relationship with our retail partners, and each year we carry out thousands of leases throughout our portfolio," explained Scentre's director of leasing and retail solutions, John Papagiannis.
based process is a pain point for us and our retail partners because of the time involved and the manual nature of the process and takes valuable time away from focusing on customers, "he added.
By digitizing the process, guarantees could be issued" on or about the same day, "companies said in a statement.
An eight-week pilot of Lygon, built on IBM's Blockchain Platform, started yesterday with live data and transactions for a test group of retail customers for rental properties. These customers are all tenants with retail outlets in some of the Scentre Group's Westfield centers in Australia.
In subsequent phases, Lygon intends to offer the platform access to all issuers, applicants, and recipients, and to extend the range of digitized bank guarantees it supports across other industries.
"Retailers of all sizes with physical outlets will experience radically improved bank guarantee cycles. retailers benefit from managing their outstanding guarantees in a secure, transparent and auditable manner, "says ANZ's banking services, head of Nigel Dobson.
Michael Thorpe, CEO, Future Cities, Institutional Banks and Markets CBA added that the approach could be applied to multiple industries and geographical areas wherever "bank guarantees or standard letter letters" are used.
"The pilot will test live transactions using distributed leads to prove that technology is commercially viable. This is a good example of digital transformation that refines customer experience," said Didier Van Not, Westpac's Director General for Corporate and Institutional banking.
Lygon pilot follows a similar proof of the concept operated by Westpac, ANZ, Scentre and IBM in 2017. A resulting White Paper on the trial concluded that the full benefit of the technology would "only be achieved through broad industrial adoption" the fashion for the technology to be solved.
CBA has carried out a number of blockchain-based initiatives; including collaborating with the World Bank to issue the first bond globally to be "created, allocated, transferred, and managed by blockchain technology" and the use of a blockchain platform for trading and tracking of seventeen tons of almonds .
"Commonwealth Bank has a strong track record of collaborating to innovate through blockchain technology. This pilot is a collaborative approach to exploring how we can use blockchain technology to revolutionize bank guarantees and make the process simpler, easier, and more transparent for our business customers – simplifying document exchange through real-time monitoring and speeding up the issuing process, "said Thorpe.
Lygon's five founding companies have formed a jointly owned company – Lygon 1B Pty – to operate the platform.
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