IBM, ANZ, Scentre Group, Commonwealth Bank, and Westpac have unveiled a live pilot for Lygon together. The new digital platform is designed to use blockchain technology to significantly change the management of bank guarantees. These guarantees are mostly needed as part of a retail property lease.
In the past, these bank guarantees have always been issued manually and on paper. Digitizing this procedure is expected to eliminate the risk of fraud for all participants. Furthermore, it will decrease the potential of errors and increase the speed of execution considerably.
Lygon 1B Pty is the company that will manage and operate the Lygon platform. This company is jointly owned by the five founder members. The ANZ banking services lead, Nigel Dobson, said that the unique and transformational platform will facilitate the complete digitization of bank guarantees.
All retailers with physical outlets will experience radically enhanced bank guarantee cycle times irrespective of their sizes. Moreover, retail landlords will benefit from managing their outstanding guarantees in a secure, auditable, and transparent manner.
According to the participating firms, the new Lygon platform has immense potential to minimize the time taken to issue a bank guarantee from up to a month to the same day. Lygon is also designed to benefit multiple sectors and simultaneously reduce the risk of fraud across billions of dollars guaranteed by the banks.
The pilot program will run for eight weeks with live transactions and data for a selected test group of retail property leasing customers starting from July 3. Westpac’s general manager corporate and institutional banking, Didier Van Not, said that Lygon is a major expansion of the proof of concept they conducted in 2017.
Westpac has already developed a blockchain-based platform to digitize the bank guarantee ecosystem. Didier added that:
“The pilot will test live transactions using distributed ledger to prove the technology is commercially viable.”
In its subsequent phases, Lygon will expand its range of digitized bank guarantees that it supports. It plans to expand across other sectors and offer its services to many other customers in the retail property industry.
This pilot test will feature leaseholders with retail outlets in different Scentre Group’s Westfield living centres across Australia. After the test period, Lygon plans to provide access to the platform to all applicants, issuers, and beneficiaries. Over time, it will also support wider use cases.