CBA, Westpac, ANZ adopt same tech as Bitcoin

Same technology used for Bitcoin and Dogecoin is now replacing a 200-year-old paper system for bank guarantees.
The post CBA, Westpac, ANZ adopt same tech as Bitcoin appeared first on The Motley Fool Australia. –

Graphic image depicting blockchain technology

Three big banks have launched the first-ever blockchain product to be used in commercial banking in Australia.

A privately-held business named Lygon made the announcement on Tuesday, showing how it implemented blockchain to create digital bank guarantees.

The company is a joint venture between Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking GrpLtd (ASX: ANZ), Westfield owner Scentre Group (ASX: SCG) and IBM (NYSE: IBM).

Blockchain, also referred to as a decentralised database, is a technology that “chains” together bits of data stored with individual users to form one big coherent picture. It’s the same technology that cryptocurrencies like Bitcoin, Ethereum and Dogecoin are based on. 

Paper-based bank guarantees have a more than 200-year-old history in Australia. 

Lygon chief Justin Amos said the digitisation of such an old system was a massive milestone.

“Lygon is paperless, transparent, accessible, and standardised, removing the inefficiencies, costs, and risks associated with a paper-based system,” he said.

“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.”

Reducing a 4-week transaction into 1 day

Bank guarantees assure a payee that if a payer defaults on money owed, the financial institution would cover the shortfall.

In the example of a residential tenancy agreement, Lygon’s blockchain has condensed a manual process that can take 4 weeks into potentially 1 day.

“Banks can maintain database ledgers of all digital guarantees in existence, with access to a full and auditable history of every transaction ever made,” said Amos.

“Landlords are not at risk of losing or holding invalid guarantees, and retailers, as well as other tenants, have a simplified and fast system for providing security and accessing premises sooner.”

ANZ banking services lead Nigel Dobson said 3 parties were usually involved in a bank guarantee.

“The Lygon platform actually benefits all 3. It’s a win-win-win situation.”

For CBA global client solutions chief Jessica Dwyer, the blockchain technology lies in cutting out numerous gratuitous manual steps.

“Reducing the multiple hand-off points, reducing the necessity of our customers to walk in and out of a branch, buying down the risk that’s associated with fraud.”

The Lygon joint venture is also working on other financial uses for blockchain, Amos said.

“Our core technology can be applied to other types of payment guarantees and financial instruments, such as performance bonds, offering a wide range of opportunities to pursue as we expand Lygon’s reach and service offering.”

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post CBA, Westpac, ANZ adopt same tech as Bitcoin appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!