The three largest banks in Australia, Commonwealth Bank of Australia, New Zealand Banking Group Ltd. and, Westpac Banking Corp are partnering with Scentre, a Westfield mall owner, to test IBM’s new blockchain-based bank guarantee platform for processing retail financing, reports Reuters on July 4, 2019.
Australia’s Biggest Banks to Trial Blockchain Platform
Per sources close to the matter, Commonwealth Bank of Australia, New Zealand Banking Group Ltd. and, Westpac Banking Corp. and others are collaborating with Scentre to trial a new blockchain-based bank guarantee platform for shopkeepers developed by the computer hardware company, IBM.
The platform is based on blockchain technology and will use a shared database on the same network to process retail financing guarantees that are used by retailers to assure their landlord (Scentre) that they will pay their rent irrespective of the outcome of the sales.
Prior to this, guarantees were issued manually in the form of paper, and it could take up to a month for them to be processed.
The participating banks are, therefore, hoping that the use of the blockchain-based platform will automate the process, reduce the processing time to a day, and help to curb the risk of fraud.
According to Nigel Dobson, ANZ’s head of digital banking, feedback received through other financial institutions and IBM’s network reveal that this is the world’s first use of a blockchain-based platform to process retail financing.
Dobson also revealed that despite the narrow use case of the blockchain in this aspect, the scope to expand the product set that could be stored, managed, and secured on the network is beyond typical bank guarantees.
When asked if Australian banks would consider launching their cryptocurrency, Dobson said there are no plans to do so anytime soon.
Banks are taking a bold step to adopt blockchain. Another instance of this is an investment made by 300 lenders globally, including Westpac and Commonwealth in R3 LLC, a blockchain developer, to end processing bottlenecks.
There’s also Ripple’s partnership with various financial institutions to use its blockchain platform to facilitate cross border payments.