ANZ and Westpac Conduct Successful Blockchain Trial With IBM

Two Australian banks ANZ and Westpac have announced that they have successfully concluded a significant trial in collaboration with tech firm IBM in which blockchain technology was used to digitise the bank guarantee process in real estate leasing transactions.

The banks applied the innovative distributed ledger technology (DLT) on the bank guarantee process in commercial property leasing which currently follows a lengthy paper-based system. The two rival banks have collaborated in a bid to develop proof of concept for the technology and encourage the banking industry to explore its potential applications.

Under a blockchain, digital assets and related transactions are tracked with a high level of accuracy, leading to improved trust and consensus among participants. ANZ said that the use of blockchain could play a major role in eliminating fraud and in increasing efficiency.

ANZ’s general manager of digital banking, Nigel Dobson noted that while banks issue documents as needed, it becomes a challenge for landlords and tenants to ensure that the physical copies are verified and handled securely. He said that often such documents have been found to be fraudulent

The trial involved shopping centre operator Scentre Group and IBM’s Hyperledger Fabric V1.0, a blockchain framework .A digital ledger was developed to maintain accurate records of transactions between the participants. Scentre CFO Mark Bloom stated that tracking of manual guarantees was tedious considering that there were 11,500 retailers operational between Australia and New Zealand.

The three companies have published a joint white paper where they note that the trial showcased the benefits of shifting to digital format, adding that it would enhance efficiencies for all parties concerned. However they pointed out that unless all stakeholders worked closely to build solutions, it would be difficult to replace the current inefficient processes.

In a statement Andrew McDonald, GM of Corporate and Institutional Banking at Westpac said

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. 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.

The three companies have said that the bank guarantee trial was part of the initiative to build solutions for the entire banking industry. They have invited other interested organisations to participate in a planned larger pilot.

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