Australia’s bank guarantees climb onboard blockchain
Banks can now issue bank guarantees in one day with the Lygon blockchain platform
Banks in Australia will soon be capable of issuing bank guarantees in just one day with the help of the Lygon blockchain platform.
The Lygon platform, which runs on the IBM Public Cloud, has successfully concluded its pilot run with the ANZ, the Commonwealth Bank of Australia (CBA), Westpac, and a group of 20 Australian businesses.
Current paper-based guarantees can take up to a month before it can be issued. Bank guarantees are a kind of financial backstop that is offered by a lending institution, which ensures that the lender will take care of the liabilities of a debtor.
Financial guarantees are a necessary part of securing retail property leases. From this month onward, early adopters can access the platform to reduce the time spent in processing and reduce the risk of fraud.
A report that was released on September 1 revealed that the three Australian banks, alongside the retailers Scentre Group and IBM, are working on expanding the Lygon platform for commercial use.
“The commercialization of the Lygon platform represents a significant milestone for blockchain technology in Australia and globally. In digitizing a bank guarantee, we’ve essentially transformed a three-way contract. We’ve digitized the paperwork, the process, and the legality behind it.” Nigel Dobson, the chairman of Lygon, explained.
The pilot test for the blockchain platform began in July 2019. It claims to have onboarded new applicants in less than 15 minutes and supported a few other common bank guarantee processes, such as amendments and cancellations.
After the commercial launch of Lygon, the team will work on the next stage of development, which involves expanding the range of digitized bank guarantees to customers. The blockchain platform is expected to be open to the general public, early next year.
It will also explore the possibility of expanding into New Zealand and other international markets.
This is only one example of how blockchain technology can be used to enhance banking and financial services. In the United Arab Emirates (UAE), the UAE Trade Connect (UTC)has managed to uncover $3.75 million fraudulent transactions since its launch in June 2019, which represents $435 million in potential losses.
The UTC was a projected eight UAE banks taken upon, in collaboration with Etisalat Digital, the local telecommunications provider. This included the First Abu Dhabi Bank (FAB), RAKBANK, Emirates NBD, the Commercial Bank of Dubai, the National Bank of Fujairah, Mashreq Bank, ADIB, and the Commercial Bank International.