CBA, Westpac, ANZ Issues First Digital Bank Guarantee on Blockchain

Lygon, a blockchain consortium of five organizations in Australia, has issued the first-ever digital bank guarantee in the country using blockchain technology. Bank guarantees are a pillar of financial systems worldwide. However, Australia has since relied on the traditional system of issuing these guarantees. Today’s development is considered as a major milestone that will digitize the process of commercial banking in Australia, according to the report on Tuesday.

First Paperless Bank Guarantee in Australia

The blockchain platform was formed by three banks in Australia – Australia and New Zealand Banking Group (ANZ), Westpac, and Commonwealth Bank of Australia (CBA) – together with IBM Australia and Scentre Group. The platform is focused on streamlining the banking process in Australia, and it’s powered by the IBM blockchain network. For more than 200 years, banks in the country mostly issued paper-based guarantees.

This traditional method of issuing bank guarantees was not only time-consuming but also expensive. It wasn’t also the most transparent method, which led to the establishment of Lygon. Basically, this platform is aimed at digitizing the entire process of paper-based guarantees through blockchain technology, which has been achieved today. 

Lygon will Ensure Transparency with Blockchain 

“Lygon is paperless, transparent, accessible, and standardized, removing the inefficiencies, costs, and risks associated with a paper-based system,” said Lygon’s chief, Justin Amos. “The ability to reduce the risk of fraud and handling errors is a major advantage to Lygon, particularly given the heightened focus on digital security for businesses of all sizes and scale these days.”

According to Amos, the Lygon blockchain will be expanded to include other financial services in the country. The technology can be used to improve the processes with payment guarantees and financial instruments like performance bonds.