Victor Ugochukwu · Dec 14, 2020 . 5min read
Australia’s ANZ Bank, Westpac, Commonwealth Bank Digitizes Bank Guarantees with Blockchain
Blockchain technology can lock bank guarantees, thus Australian banks digitize Bank guarantees with Blockchain technology.
By Komal Joshi · Sep 2, 2020 . 5min read
The three major Australian banks have joined hands to form a company. ANZ Bank, Westpac, and Commonwealth Bank have developed a new company, Lygon, to digitize bank guarantees utilizing blockchain technology. It intends to eliminate fraud. It also aims to reduce the time of tenants and landlords to agree on commercial leases.
Scentre Group, which leads Westfield shopping centres, and global technology giant IBM are the other two shareholders in Lygon. They propose to abolish paper-based guarantees used by governments and the construction and energy industries. The company is seeking a chief executive and a small team to manage the platform, wherein other banks and landlords will join.
Accordingly, there are strategies to expand it into New Zealand. However, IBM could help to roll it out to banks abroad. When it becomes accessible, in September, it will be the first at-scale application of blockchain by Australia’s financial services sector, after years of testing different use cases, from trade finance to moving money across borders.
Blockchain Technology Helps Digitizing Guarantees
Blockchain allows the guarantees to be locked. Thus, the alteration of guarantees is not possible. Therefore, it can be shared with users securely using entitlement controls built into the technology. The digital process increases transparency and security through the use of blockchain technology while maintaining the privacy required in such a business process. National Australia Bank has trialled the technology but chose not to become a Lygon shareholder, as it pulled back on projects owing to the Covid-19.
Banks offer commercial lease guarantees on account of a tenant to a large commercial landlord. This assures the payment of the rent. Until now, the process has been paper-based. It usually takes numerous weeks for the preparation, negotiation, and deliverance of documents manually. Now, they will be able to be published on the same day. IBM’s Hyperledger technology will permit ANZ, Westpac, and CBA to save their instruments securely on a single platform.
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