One of Israel’s largest banks, Bank Hapoalim, has joined a blockchain-based platform recently released by IT company Tata Consultancy Services (TCS).
The TCS platform, known as the Digital Bank Guarantee, is based on the Quartz blockchain and is aimed at the digital banking industry in Israel. The new tool is designed to help banks more effectively manage the life cycle of bank guarantees, including issue, modification, termination and drawdown.
Bank guarantees are financial protection offered by banks in which a lender ensures that a debtor’s obligations are met. If a debtor fails to pay off a loan, the bank pays the costs.
The solution creates a dedicated node for issuers to transmit digital guarantees. According to TCS, the platform will eventually be extended to use cases other than bank guarantees.
According to Dov Kotler, CEO of Bank Hapoalim, the Digital Bank Guarantee will enable the bank to expand its customer base to include companies, small and medium-sized businesses and individuals.
The immutable aspect of blockchain technology has become increasingly popular with financial institutions dealing with various forms of debt.
Major Australian banks have already started implementing distributed ledger technology for bank guarantees. Earlier this year, Cointelegraph reported that three of the country’s four major banks are starting a new company to digitize bank guarantees.
Australian and New Zealand banking group Limited, Commonwealth Bank of Australia and Westpac Banking Corporation have developed the Lygon blockchain platform that runs on the IBM public cloud.