Top Australian Banks, IBM to Pilot Blockchain for Retail Lease Bank Guarantees
A consortium consisting of financial services companies in Australia have grouped up with IBM and shopping center operator Scentre Group to launch a pilot that puts retail lease bank guarantees on a private blockchain.
Lygon – launched with partnership from ANZ, Commonwealth, and Westpac banks on July 3 – will have the ability to collect and digitize data from a test group of Scentre Group leaseholders across Australia.
The firms involve hope the Lygon platform will shorten the time it takes for banks to issue guarantees, reducing that time to a day. The same validation process could take up to a month if being issued on paper, based on current practices.
Moreover, digitization reduces the risk of fraud and errors across the billions of dollars banks guarantee, the Lygon backers contend. All Australian retailers are required to have a bank guarantee to secure such a lease and operate their stores.
It all depends on a successful pilot, Lygon will offer access to the platform to all bank issuers, lease applicants, and beneficiaries. The five founding members may also expand the area of research into other industry uses.
IBM did not respond to request for comment.
The Lygon project represents the latest blockchain-based system built specifically for bank guarantees. Earlier in the year 2017, the Belarussian Central Bank approved the usage of blockchains for similar kind of service, and in 2018 the multinational banking firm Standard Chartered partnered with manufacturing firm Siemens for a trade finance bank guarantee pilot.
A similar pilot involving IBM, Westpac, Scentre Group and ANZ was successfully concluded in 2017. In 2007, the consortium came to the conclusion that in order to receive industry adoption, the project “needs to be scaled and discussed with a broader range of participants.”
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