A digital bank guarantee has just been executed through a blockchain system in Australia, what is being called a first for a commercial banking product in the nation.
Lygon, a blockchain-based platform and joint venture between banks ANZ, Westpac and Commonwealth, shopping mall operator Scentre Group and IBM, announced the “milestone” news on Wednesday, announcing that the technology would be tested in mid-2019 .
The company’s aim was to bring the 200-year-old paper-based bank guarantee process “into the digital age”.
Typically, in a paper-based system, bank guarantees validation can take a few days to a month because the process relies on manually verifying information. By digitizing this process, Lygon has shown that review time can be reduced to just 24 hours.
“Lygon is paperless, transparent, accessible and standardized, eliminating the inefficiencies, costs and risks of a paper-based system,” said Justin Amos, CEO of Lygon. “This is the first time blockchain has been used in a commercial banking product in Australia.”
Amos added that the platform’s technology can be ported to other types of payment guarantees and financial instruments such as performance guarantees and leases.
“Landlords are not at risk of losing or holding void warranties, and retailers, as well as other tenants, have a simplified and quick system to provide security and earlier access to premises,” he said.
