Blockchain technology is steadily gaining traction in the financial world. Australia’s top 3 banks aim to use blockchain to reduce the risk of fraud as well as digitize bank guarantees.

On Thursday, in a significant development, the top 3 banks in Australia stated, they have agreed to partner with IBM and with the Scentre Group to test blockchain technology to digitize bank guarantees.

In a statement, Commonwealth Bank of Australia, Australia and New Zealand Banking Group and the Westpac Banking Corp stated, they are exploring how to move away from paper-based bank guarantees in order to slash the risk of fraud while reducing processing time.

A new blockchain platform is being tested on a group of retail property leasing customers in an eight-week pilot program.

“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,” said Didier Van Not, general manager corporate and institutional banking at Westpac.

Blockchain is an automated, computerized system to share, verify and permanently record data.