ANZ, Wells Fargo complete blockchain project
(11 October 2016 – Australia) ANZ Banking Group and Wells Fargo have announced the completion of a six-month project that built and tested a distributed ledger for reconciling and settling payments between the two banks.
In a recent report on their "proof of concept" the banks said blockchain could "add real value to both the customer experience and the efficiency" of correspondent banking relationships, which refers to deals between global banks over access to local payment systems.
"Cross-border payments and correspondent banking are ripe for rejuvenation," ANZ and Wells Fargo said.
The banks added that the technology offers a high degree of security through cryptography. The banks suggested Swift could morph into a "central body of governance" managing blockchain networks.
Both ANZ and Wells Fargo are members of the Linux Foundation, and used its Hyperledger technology to build a private, shared, distributed ledger platform that operated in parallel with existing infrastructure. It allowed both banks to move funds without centralised infrastructure. They said this increased the speed of confirming the cross-border payment, and made it easier to audit the transactions and to preserve confidentiality.
Onerous reconciliation activity, delays in advising of fund disbursement, and inefficiencies in management and usage of liquidity and funding "could be largely addressed if the industry were to trust a single record of account that could be shared and maintained by multiple correspondent banks," ANZ and Wells Fargo said.
Australia’s other major banks are also working on the distributed ledger technology in a bid to reduce the costs and risk of cross-border payments with various technology startups, bank conglomerates and global partnerships.
Earlier this year, ANZ's new head of digital banking Maile Carnege said: "My assumption about where we will get the fastest and most exciting short-term application is in the back and middle office to reduce cost and simplify stuff.
"That's not to say it won't hit prime time with consumers, but my guess is it won't start there."
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