IBM and three Australian banks are launching the first-ever retail financing blockchain database.
The Commonwealth Bank of Australia, Westpac Banking Corp and Australia and New Zealand Banking Group Ltd have teamed up with a shopping mall in Australia to test out a blockchain retail financing solution through software developed by IBM.
The joint test project will mark the first-ever use of blockchain technology for retail rent contracts. Currently, agreements between landlords and brand-owners take more than a month of drafting and administrative processing before they come into force. The use of distributed ledger databases and smart contracts can shorten this approval process and make contracts take effect in less than twenty-four hours.
The main hurdle before retailers and landlords is that the first need to issue assurances that they will be able to make rent payments even if their business is not achieving the desired gains. At the moment, these assurances take the form of paper contracts, which are mailed around through postal services, which makes the process very time-consuming.
Retail Financing Blockchain can revolutionize business
While blockchain technology is gaining momentum in many spheres of financing, traditional businesses are still lag in adopting it. The launch of this test project can introduce a revolution in the way businesses interact with landlords, and not only. Smart contracts can replace many forms of traditional business agreements, as this technology offers automatic authentication and fast-processing times.
The Australian Bank’s test project is with a somewhat narrow application. It focuses on aiming to resolve a particular problem in communication between retailers and landlords. However, the theoretical idea behind it applies to numerous other areas of business.
One possible application of blockchain in retail financing can be for more effective record keeping of sales transactions. Decentralized ledgers are one of the most secure databases as there is no way to lose the information stored in them. Blockchain technology eliminates the possibility of hardware or software glitches, which can easily wipe out months of stored data.
Another benefit of using retail financing blockchain can be the higher level of security. Smart contracts and distributed ledgers are all a part of a decentralized system. The possibility of an outside hack is almost eliminated.
IBM and Blockchain for Business
IBM, the technological mastermind behind this joint project, is a pioneer in developing blockchain technology for business application.
Their Blockchain for Business program has introduced the technology in numerous business niches. Some of the most remarkable advancements include food and medicine tracking projects and data administration projects for governments.
IBM is also working on popularizing blockchain technology throughout the medical industry. It has the potential to speed up information sharing between medical institutions. Secure data transfers can boost the activities of donor programs and communication between different hospitals regarding patient information.
IBM’s current joint project with retailers and banks in Australia is another step forward in exploring the benefits of blockchain technology. There is infinite potential for the application of smart contracts and distributed ledgers. IBM is the leading force in research and trial projects when it comes to blockchain technology.