ANZ and Westpac have completed a trial of distributed ledger technology for the bank guarantee process used in commercial property leasing.\nRun with IBM and Westfield shopping centre operator Scentre Group, the proof-of-concept \u201chas the potential to shift the issuance of bank guarantees from a manual, paper-based model into the digital era, and in doing so, lift efficiency for all parties involved,\u201d the companies said in a whitepaper, released today.\nIn addition to eliminating the need for physical document management, the trial also overcame other inefficiencies, including the tracking and reporting of a guarantee\u2019s status through multiple changes, the group said.\n\u201cThis is about removing the cost of fraud, error and operational risk that will continue as long as bank guarantees remain paper-based and manually issued,\u201d said Andrew McDonald, general manager corporate and institutional banking at Westpac\n\u201cNext steps involve encouraging all industry players to adopt this technology so we can better protect and save money for our customers. Beyond that there is no reason why this couldn\u2019t be applied across other industries.\u201d\nMark Bloom, Chief Financial Officer at Scentre Group, said an update of the guarantees process was \u2018long overdue\u2019.\n\u201cWith approximately 11,500 retailers across Australia and New Zealand, who use guarantees to support rental obligations, manual tracking of guarantees has been an extremely cumbersome and labour intensive process,\u201d he added.\nThe trial used core technology from Hyperledger \u2013 which ANZ and IBM are founding members and continuing supporters of \u2013 specifically the Hyperledger Fabric V1.0 framework, hosted by The Linux Foundation.\nThe group\u2019s proof-of-concept could be transferable \u201cto a broader guarantees context\u201d, they said. A plan is now underway to build a shared solution with the rest of the industry, and to invite other organisations to participate in a larger pilot, ANZ said in a statement.\n\u201cHowever, this move cannot be done in isolation. The changes required are pervasive and will require close collaboration between competitors, regulators, consumers, technologists, and the legal community in order to achieve a suitable solution,\u201d the whitepaper states.\nANZ\u2019s general manager wholesale digital, digital banking Nigel Dobson said the proof of concept has the potential for \u2018industry-wide adoption.\n\u201cWe have been keen to avoid the hype surrounding blockchain and distributed ledger technologies, and instead focused on practical and deliverable use cases,\u201d he said.\n\u201cThis proof of concept demonstrates how we can collaborate with our partners to develop a digital solution for customers, which also has the potential for industry-wide adoption.\u201d\nWestpac and ANZ have been exploring the potential of distributed ledger technology for some time.\nWestpac is a member of the R3 consortium of global financial institutions, which researches blockchain database usage in the financial system. In 2015 it began using Ripple Labs' peer-to-peer, distributed payments network to quickly transfer payments between subsidiaries.\nIt began using Ripple to settle and clear payments the same day, and as a low cost means to make low-value international payments.\nIt is also the largest investor in bitcoin wallet and exchange service, Coinbase.\nLast year ANZ delivered a distributed ledger platform prototype with US bank Wells Fargo for correspondent banking payment reconciliation and settlement.