After joining forces in July last year to progress work on a blockchain-based bank guarantee platform, ANZ bank, the Commonwealth Bank of Australia (CBA), and Westpac have announced its expansion, alongside IBM and shopping centre company Scentre Group.
Lygon is touted by the group as reducing the time to issue a bank guarantee from up to one month to one day. Financial guarantees are often required as part of a retail property lease.
After completing a successful pilot that IBM said transformed the cumbersome, paper-based, and inefficient bank guarantee process into digital form, the offering will be made available to early adopters from this month.
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The Lygon platform runs on the IBM public cloud. It leverages the IBM Blockchain Platform, which is built on top of Hyperledger Fabric, an open source blockchain project from the Linux Foundation.
It was designed as a new piece of infrastructure by the group aimed at being “at the crossroads between finance and technology”.
According to the group, it addresses pain points across the business ecosystem that were unable to be solved by the participating organisations in isolation.
“The commercialisation of the Lygon platform represents a significant milestone for blockchain technology in Australia and globally,” ANZ banking services lead and Lygon chairman Nigel Dobson said.
“In digitising a bank guarantee, we’ve essentially transformed a three-way contract. We’ve digitised the paperwork, the process and the legality behind it.”
The pilot in July 2019 saw a test group of around 20 Australian businesses, including menswear retailers MJ Bale and Gazman. For the pilot, Lygon onboarded new applicants to the platform in less than 15 minutes and supported a number of other common bank guarantee processes including amendments and cancellations, IBM said.
“We were pleased to demonstrate a range of improvements to the bank guarantee process, including a significant reduction in the risk of fraud across billions of dollars guaranteed by the banks, decreasing the potential for errors and increasing the speed of execution,” Dobson added.
The group hopes to expand the range of digitised bank guarantees it provides and explore expansion into New Zealand and other international markets, focusing on cross-border guarantees that are commonly used for trade.