One of the largest Israeli banks, Bank Hapoalim, has joined forces with a blockchain-based platform recently launched by IT company Tata Consultancy Services, or TCS.
The TCS platform, called Digital Bank Guarantee, is based on the quartz blockchain and targets the digital banking industry in Israel. The new tool should help banks manage the life cycle of bank guarantees more effectively, including issuance, change, termination, and challenge.
Bank guarantees are financial guarantees that banks offer when a lender secures the lender’s obligations. If the debtor cannot repay the loan, the costs will be covered by the bank.
The solution will allow issuers to create a dedicated node for digital collateral transfer. According to TCS, the platform will eventually be expanded to include more than just bank guarantees.
According to Dove Kotler, CEO of Bank Hapoalim, Digital Bank Garanti will allow the bank to expand its customer base at the expense of companies, SMEs, as well as individuals.
The unchanging aspect of blockchain technology is becoming increasingly popular among financial institutions that deal with various forms of debt.
Major Australian banks have already started implementing distributed ledger technology for bank guarantees. Cointelegraph reported earlier this year that three of the country’s Big Four banks have created a new company to digitize bank guarantees.
The Lygon blockchain platform, which runs on the IBM Public Cloud, is developed by the Australia and New Zealand Banking Group Limited, the Commonwealth Bank of Australia, and the Westpac Banking Corporation.