ANZ, Westpac deliver blockchain-backed bank guarantees


ANZ and Westpac have teamed with international technology powerhouse, IBM, and the country’s largest shopping centre owner, Scentre Group, to successfully deliver a blockchain-enabled guarantee process for commercial property leasing.

The trial utilised Distributed Ledger Technology (DLT) to replace paper-based bank guarantee documents, resulting in a single source of information for conferring leasing arrangements.

The success of the digitisation trial is set to render the traditionally paper-based guarantee process obsolete. 

“The solution explored in this POC (proof of concept) has the potential to shift the issuance of bank guarantees from a manual, paper-based model into the digital era, and in doing so, lift efficiency for all parties involved,” according to a release by the trial participants.

By delivering a single source of information through a shared ledger, the blockchain-backed process sought to reduce the potential for fraud and increase the efficiency of the guarantee process.

Mark Bloom, Chief Financial Officer at Scentre Group, considered a change to the “decades-old process for issuing, tracking and claiming on guarantees … long overdue.”

“With approximately 11,500 retailers across Australia and New Zealand who use guarantees to support rental obligations, manual tracking of guarantees has been an extremely cumbersome and labour intensive process,” Bloom said.

Scentre is among the largest shopping centre owners in the country, established to manage the Westfield Group’s holdings across Australia and New Zealand. The mall owner maintains separate leasing arrangements with more than 11,500 retailers.

Andrew McDonald, General Manager Corporate and Institutional Banking at Westpac, said the purpose of the trial was to find a means to eliminate fraud, operational risk, and human error that plagues paper-based guarantees.

For McDonald the trial’s success augurs well for further blockchain rollouts across other banking services.

“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,” McDonald said.

Nigel Dobson, General Manager Wholesale Digital, Digital Banking at ANZ, said: “We have been keen to avoid the hype surrounding blockchain and distributed ledger technologies, and instead focused on practical and deliverable use cases.

“This proof of concept demonstrates how we can collaborate with our partners to develop a digital solution for customers, which also has the potential for industry-wide adoption.”

Traditionally, guarantees took the form of a paper letter, stipulating the terms of the guarantee alongside key attributes such as the tenant, the landlord, and the amount to be paid on demand.

Bank guarantees have long been considered ripe for a digital overhaul. Physical bank guarantees remain susceptible to loss, forgery, lack of standardisation, and are often subject to multiple – often unauthorised – amendments.