As part of an initial proof of concept, ANZ and Westpac hoped to assess if blockchain could replace the current paper-based process.
To prove feasibility in a short period of time, the scope was narrowed to commercial property leasing, where bank guarantees are commonly used by prospective tenants to secure a contract in lieu of a cash deposit or rental bond. For landlords, they provide certainty in the event of the tenant’s default, while also avoiding the administrative burden of managing cash deposits and trust accounts.
The whitepaper concludes a blockchain-based solution, if adopted across the industry, has the broad potential to reduce fraud, drive standardisation and increase efficiency for tenants, landlords and banks.
The next steps are two-fold:
• Other lenders and the commercial property sector must be engaged to drive commercialisation and adoption of this technology solution; and
• The application of this solution must be explored across other industries like the trade of goods and services, financial transactions, industrial and property development projects or the development of property.
As with most DLT solutions, the benefits can only be realised through broad industry adoption. The changes required are pervasive and will require close collaboration between competitors, regulators, consumers, technologists and the legal community in order to succeed.
This will be no small feat. But what this proof of concept has demonstrated is a willingness from the industry to collaborate towards a common goal. This discussion now needs to be extended to a broader range of industry participants — their inclusion will be a core step in the roadmap towards industry adoption.
Distributed ledger technologies can facilitate the transition of many industries into the digital age — but only those willing to come together to innovate.
Hari Janakiraman is Head of Core Trade, Institutional at ANZ, Rodolf Salem is Associate Director, Credit Portfolio Management – Corporate & Institutional Banking at Westpac & Chris T’en is Senior Manager, Payments Portfolio at ANZ.