ANZ, Commonwealth Bank and Westpac are piloting a system that could issue bank guarantees in around a day.
Banks are looking to reduce the time it takes to issue Australian retailers with bank guarantees, which are often required to secure leases for retail shops.
This week, ANZ, Commonwealth Bank, IBM, Scentre Group and Westpac began piloting a new digital platform called Lygon, which is designed to speed up the process of issuing bank guarantees.
Retail lease holders in some of Scentre Group’s Westfield shopping centres are involved in the eight week pilot.
The platform could potentially issue bank guarantees on or around the same day. Currently, that process can take up to a month, according to ANZ.
“Retailers of all sizes with physical outlets will experience radically improved bank guarantee cycle times,” stated Nigel Dobson, ANZ Banking Services Lead.
“Additionally, retail landlords will benefit from managing their outstanding guarantees in a secure, transparent and auditable manner,” Dobson added.
Currently, the process of issuing bank guarantees is typically a manual, paper-based procedure. Lygon digitises the process to simplify the exchange of documents and reduce the risk of errors and fraud. It uses blockchain, which records transactions in a way that makes them easier to verify.
Bank guarantee processes are a hindrance to Scentre Group and its retail partners, stated John Papagiannis, Director Leasing and Retail Solutions at Scentre Group.
“Bank guarantees are an important part of our relationship with our retail partners, and each year we complete several thousand leases across our portfolio.
“The current paper-based process is a pain point for us and for our retail partners because of the time involved and the manual nature of the process, taking valuable time away from focussing on customers,” Papagiannis stated.
Lygon's owners plan to expand the service to other customers in the retail property sector and other industries.