Blockchain Technology to Transform the Bank Guarantee Process

Blockchain powered Lygon digital platform is launched to manage the Bank Guarantee Process. The founding members of Lygon platform include IBM, ANZ bank, Commonwealth Bank, Scentre Group and Westpac.

Lygon 1B Pty Ltd, a joint company of founding members, will operate Lygon platform.

Bank guarantees are generally processed manually and issued on paper. The Lygon platform digitizes this process. Further blockchain enabled platform will help increase transparency and security of the Bank Guarantee process. The blockchain technology reduces the risk of fraud for all parties involved, decreases the potential for errors and significantly increases the speed of execution, notes the announcement.

Several retailers around Australia secure their lease over the retail tenancy. These retailers range from a single store operator to national and international brands. All retailers require some sort of bank guarantees.

Executive Opinion

Vice President, Blockchain, Asia Pacific, IBM, Paul Hutchison, said, "Leveraging the IBM Blockchain Platform, we have transformed a paper-based banking process into an enterprise grade digital platform ready for live production at-scale. Lygon streamlines the bank guarantee process, making it more secure, helping reduce fraud risks and providing advanced transparency and privacy settings. IBM is proud to be an integral part of this development and to provide the infrastructure for this innovative banking solution which we expect to take off here in Australia and globally.”

General Manager Corporate and Institutional Banking, Westpac, Didier Van Not, said, "While the pilot is focussed on retail property leasing, this technology has the potential to benefit many sectors and reduce the risk of fraud across billions of dollars guaranteed by the banks. This is a significant expansion of the proof of concept we conducted in 2017. We have created a blockchain-based platform to digitise the bank guarantee ecosystem. The pilot will test live transactions using distributed ledger to prove the technology is commercially viable. It is a great example of digital transformation that refines the customer experience.”

The Pilot program for Blockchain powered Lygon platform

Bank guarantees are required as part of a retail property lease. The pilot program for the Lygon digital platform transforms the way businesses obtain and manage bank guarantees.

The pilot will run for eight weeks with live data and transactions. The test group will include retail property leasing customers starting 3 July. The targeted participants in pilot program are Australia's leaseholders with retail outlets in some of Scentre Group’s Westfield living centers. The Lygon platform will be further extended to other industries and the retail property sector.  The blockchain enabled platform intends to extend access to all issuers, applicants, and beneficiaries and support broader use cases over time. says the announcement.

The announcement noted that Lygon platform has helped in reducing the issuance of bank guarantee from up to a month to a day.