Why the RBA would want to create a digital Australian dollar

From The Conversation.

The Reserve Bank of Australia could join the likes of Estonia and Lebanon in creating a cryptocurrency based on the Australian dollar, to reap the benefits of technology like the blockchain but with more stability than other well known currencies like Bitcoin.

The RBA has already been approached by interested startups to create this new digital currency, known as the “DAD” or Digital Australian Dollar.

In contrast with other cryptocurrencies a state-backed digital currency has the advantage of being backed by the government as in fiat currency, but at the same time has the technological advantages shared by other cryptocurrencies.

A digital Australian dollar could remove the role of middlemen and create a cheaper electronic currency system, while at the same time enabling the government to fully regulate the system.

It would also allow transactions to settle faster (several minutes to an hour) than the traditional banking system (several hours to several days), especially in a situation where an international payment is involved.

The difference between a digital Australian dollar and Bitcoin

We already use the Australian dollar in a digital form, for example paying via your smartphone. But banks are essential in this system, moving money on our behalf.

When using a cryptocurrency, you interact with a system like the blockchain, an online ledger that records transactions, directly. Bitcoin, Litecoin, and Ethereum are examples of cryptocurrency that use the blockchain in this way. These currencies are created by the community that use them and are accepted and trusted within the community.

However, since the community runs the system, the price of the cryptocurrency solely depends on the market mechanism. When the demand increases, the price increases, but when the demand decreases, the price also decreases. While it might create an opportunity for speculators to gain profit from trading, it also creates risk for the cryptocurrency holders.

In comparison to cryptocurrency, the Digital Australian Dollar might be well managed that the price volatility could be reduced significantly. The government holds the capability of increasing or decreasing the money supply in the system. This power can be used to stabilise the market supply of the new digital currency.

The blockchain technology also reduces the fee for every payment made. This is made possible by removing the role of banks or other intermediary parties charging fees for their services. However, a small transaction fee still needs to be introduced to protect the system from being flooded by adversaries with insignificant transactions.

The characteristics of cryptocurrency itself might limit its usage to daily transactions. As the pioneer of cryptocurrency, Bitcoin was created to become a payment system, but the users gain incentive by simply saving their cryptocurrency and not using them to purchase goods or services.

They believe the future price of the cryptocurrency is higher than the current price and thus does not make a good medium of exchange nor a store of value. There is no guarantee that the cryptocurrency will hold any value in the future. Since there is nothing to back up the value, users will lose their wealth when the community no longer acknowledges the value of cryptocurrency.

Cryptocurrency might also jeopardise the local government’s effort of implementing regulations to minimise illegal activities. Perpetrators create cryptocurrency transactions easily without being detected by the government’s financial monitoring system.

The privacy features of cryptocurrency also make it hard for law enforcement agencies to determine the actors behind illegal activities. Although most governments in the world have enforced the coin exchange services to identify their users, the operation of the cryptocurrency is beyond their reach.

There are other state-backed digital currencies

The idea of creating a national cryptocurrency is not new. Estonia has explored ways to create Estcoin, following an initiative on the blockchain-based residency registration called e-Residency. Lebanon’s central bank has also started to examine the possibility of creating one.

Despite the efforts of those central banks, several questions must first be addressed before launching the real product to the public. The user’s financial data could be exposed since the blockchain will make all transactions created in the system transparent.

Consumer protection is also a concern since all transactions made in the blockchain are permanent without the possibility of being reversed. Without firm solutions to those problems, the Digital Australian Dollar will not satisfy all requirements to be the next groundbreaking innovation for the country’s financial system.

Author: Dimaz Wijaya, PhD Student, Monash University

The Next Round In The Payments Wars

The Commonwealth Bank, Westpac, and National Australia Bank are working together to build the next generation of mobile payments and wallets in Australia.  These banks are not offering the Apple Pay solution, unlike ANZ. They sought unsuccessfully  to negotiate collectively with Apple in order to gain access to the iPhone’s near-field communications (NFC) chip which would allow their own apps to make contactless payments.

The first initiative of the new joint venture will be the development of a payment app that will enable instant payments for all Australians, including small businesses, regardless of who they bank with.

Beem will be a simple and convenient free app enabling anyone to make an instant payment using their smartphone, and request payment from someone who owes them money or to split a bill. The hope is that it will become an industry-wide payment solution, and is open to interest from other banks, industry, and retail players.

Beem will work on both iOS and Android smartphones, and will be compatible across devices and different banks – users won’t need to be customers of CBA or Westpac or NAB.

Commonwealth Bank Group Executive of Retail Banking Services, Matt Comyn, said Beem will give Australians a simpler way to pay and request payments, a pain point for both consumers and small businesses.

“Two thirds of small businesses say they are owed money for completed work, with around $7,300 owed to small traders. Beem will give small businesses a cost effective and easy way to collect payments instantly and on the go for their goods and services, without having to take the larger leap into using merchant credit facilities, or issuing invoices to be paid later,” Mr Comyn said.

Beem will benefit from bank level security and encrypted user account information. Every transaction will be authenticated and subject to real-time fraud monitoring.

Westpac Chief Executive, Consumer Bank, George Frazis, said Beem expands payment choices for customers, and is the latest offering in Australia’s long history of innovative payment solutions, including EFTPOS, Pin@POS, chip, tap and pay, and wearable payment devices.

“We are committed to giving our customers more choice by supporting a range of convenient ways for them to pay and transfer their money. Customers will soon be able to ‘Beem’ free payments instantly using any smartphone, regardless of who they bank with and without the need to add account details.

Innovations such as Beem and wearables are leading the way in payment solutions because they’re convenient, easy to use, and fit in with people’s lifestyles – we firmly believe in going to where our customers are and providing them with greater choice,” Mr Frazis said.

NAB Chief Operating Officer, Antony Cahill, said the bank is continually looking for opportunities to make banking easier, simpler, and more convenient for its customers, both consumers and businesses.

“Think about all the times you’ve gone out for dinner and split the bill – this app will make it easy for Australians to pay their family and friends instantly. Or, when you go to the local market and need to pay the butcher – this means instant payment through your phone. This is the industry working together to deliver an innovative payments solution, no matter who you bank with,” Mr Cahill said.

Commonwealth Bank is currently conducting user testing of a Beem prototype, with the app to be available for download on iOS and Android smartphones later this year.

Beem will initially have a sending limit of $200 a day ($6,000 per month), with a monthly receiving limit of $10,000 as an initial risk control measure.

Beem will be available to all bank customers and small businesses that hold a global scheme debit card issued by an Australian Authorised Deposit-taking Institution (ADI).

The joint venture will be independently run, with a mandate to actively seek new participants to join the initial three participants. Future product initiatives beyond the payments facility are being planned, including digital wallet features and capabilities.

Westpac Reveals ‘PayWear’ Wearable Payment Technology

Given the stalemate with Apple Pay, it is interesting to see the recent announcement that Westpac customers will soon be able to tap-and-pay hands-free with the announcement of a new wearable payment option, ‘PayWear’.  “Westpac PayWear uses the same contactless payment technology as your Debit Mastercard®. You simply tap the accessory wherever contactless payments are accepted and the transaction will be debited from your everyday bank account”.

Westpac 'PayWear'

PayWear Essentials, available early December, includes a silicone band and a ‘keeper’, which can be easily attached to an existing watch or fitness band, containing a microchip (PayWear Card) linked to the customer’s everyday transaction account.

Customers can tap and pay in the same way they regularly do with their debit card, without having to reach for their wallet or smartphone, through the new range of waterproof and battery-free wearable accessories.

Westpac Group Chief Executive, Consumer Bank, George Frazis said customers across the country embrace greater convenience and expect to be able to simply tap-and-pay.

“Australia has the highest contactless penetration in the world, and cards continue to replace cash as consumers demand convenience. We’re always looking for new ways to help make our customers’ lives easier, and with our new PayWear products, customers will be able to pay on-the-go, in one hands-free step.

“With PayWear, there is no need to search through a bag, login to an app or worry about battery life. It will be on the go with our customers and ready for use when they are.

“When speaking with customers, personal style and choice were important. In fact, 70% agreed that they would only wear a wearable device if it suited their own personal style and lifestyle. This is why we will collaborate with iconic Australian designers to create a variety of wearable accessory designs to suit different tastes, preferences and styles,” Mr Frazis said.

The first Australian designer to be announced, who will design a range of unique products for Westpac PayWear, is award-winning surfboard shaper and entrepreneur, Hayden Cox of Haydenshapes. A range of leading Australian designers will be hand-picked to speak to a wide mix of everyday Australians – from surfers and fitness fanatics, to busy parents, professionals and festival-goers.

Hayden Cox says the opportunity to collaborate with Westpac has been a natural fit when it comes to designing products that are innovative, functional and stylish.

“Functional design is something I’ve always been passionate about – particularly technology and products that improve experiences for people. It was this passion which led me to creating and filing a patent on my parabolic carbon fibre surfboard construction, FutureFlex, and wanting to uniquely design my product to improve the surfing experience.

“Working with Westpac to create an exclusive range of wearable accessories which evolve the way people make contactless payments is exciting to me. This product signals an inevitable and innovative progression of our everyday routines. While some customers may opt for the simpler Essentials range, there is also a part of the market that will want something with a little more flavour. This is where the products I’m designing will sit.”

All Westpac customers with an everyday banking account eligible for a Debit Mastercard® will be able to order a PayWear Card online via Westpac Live, which can be inserted into the PayWear accessory of their choice. The PayWear Essentials range of wristband and keeper will be available from December. The Designer range is due to be available to customers in early 2018.

Westpac customers will be able to use PayWear to make purchases on all contactless-enabled terminals.

“Unlike many other wearable payment options, our customers don’t require an expensive device to access this technology. Customers will be able to get a PayWear Essentials accessory free of charge for a limited time, making it accessible to all our everyday banking customers,” Mr Frazis said.

The announcement of PayWear builds on the Westpac Group’s strong history of digital innovation, as the first to introduce internet banking to Australia, and the first in the world to deliver fingerprint sensor technology (Touch ID) to mobile banking logon in 2014.

On The Digital Innovation Front Line

I had the chance to catch up with Martin McCann, the CEO and Co-Founder of Trade Ledger, the newly launched platform-as-a-service for business lenders and claimed as the world’s first open digital banking platform exclusively for business lending. The platform, they say, will help banks assess business lending risk in real time and will so address the US$1.7 trillion global under-supply in trade finance lending, so providing high-growth companies with much-needed working capital.

Martin McCann, the CEO and Co-Founder of Trade Ledger

Martin McCann has a long history is tech, including time with SAP in their Business Networks Division, and applied this experience to seeking out the best fit opportunities as companies digitise their supply chains. He thinks businesses, especially those in the mid-market who are growing fast, are completely underserviced by banks and other financial institutions, and so built Trade Ledger to close the “last mile” gap between these firms and their lenders; something which is now possible thanks to the migration of business data into the cloud.

McCann says he does not see Trade Ledger as a Fintech, as it does not lend to firms directly, but rather is a technology company which via its platform, facilitates the connection between lenders and businesses. And he has ambitious growth plans, not just in Australia but beyond over the next 3 years.

Targeting mid-market firms, with a turnover of around $20-100m, the platform ingests data from their invoicing and accounting systems via an open api, (and can also pull information from enterprise systems like SAP), as well as trading documentation, financial information, bank statements and credit bureau data.   Trade Ledger also has its own trade invoicing solution, which can also be used. They apply custom analysis to these datasets on the platform.

Trade Ledger Platform

Then they work with Lenders who want to use the platform, getting the lending, risk and product teams in the bank to define their trade finance underwriting processes, giving the opportunity to transform these processes, before customising the Trade Ledger platform to meet their specific credit assessment requirements.

Once set up a lender can make trade finance lending decisions more quickly, and accurately, and McCann says the business case to these banks is very compelling. Currently they have a couple of Australian non-bank specialist lenders on the platform, and expect a global top-20 bank to come on board soon.

And here is the rub, their experience to date has been that banks in Australia may recognise that Fintechs should not be regarded as competitors, but rather partners (something which has changed relatively recently); but the process of working inside their slow and complex decision making machinery means lenders are missing the boat. In fact, McCann points to the UK, where lenders are up for the challenge, and cites examples of organisations who say within 4 weeks of engaging with a new concept, they guarantee a decision, so as not to waste time. Hence the global focus.

McCann and his team are clearly on a mission, and already have plans to bolt in additional added value functionality into the platform, based on artificial intelligence and machine learning which can leverage the rich data in the system.

Whilst he sees potential for Blockchain down the line, they are focussing on accurately predicating the probability of default and fraud within a firm and transaction set, complete with confidence scores. This should be operational in 1Q 2018. This will enhance the lenders underwriting ability and provide greater benefits across the value chain.

Another innovation which he calls Conversational Commerce, is aimed at the owner of the business, by providing analysis of their working capital and offering these insights by a bot, thus enabling the owner to benefit from the knowledge and experience contained in the platform. This solution will appear sometime next year.

So this is one to watch. They have spotted a real niche, are harnessing the best of digital transformation to help firms source the trade credit they need to grow, and assist lenders to improve their underwriting processes and operational efficiency. Through their open platform, they are, we think, on the Digital Innovation Front Line.

Mastercard and Partners Show Augmented Reality Shopping

From Brand Channel.

As shoppers look for more secure payment transactions and engaging in-store and online/mobile experiences, Mastercard is using augmented reality to deliver on that as well as enhance the overall retail experience.

Mastercard chose Money20/20 in Las Vegas this week to demonstrate how its Masterpass solution seamlessly enhances an AR-based retail shopping experience that uses iris authentication for a simpler, security-focused solution.

In Mastercard’s vision, shoppers can view digital representations of products before purchase, learn more about them and see additional options not available in the physical location along with access to instant recommendations.

To complete a purchase, users can pay using Masterpass and iris authentication, technology developed by Qualcomm, selecting a card from their Masterpass-enabled wallet and press the Masterpass button on the screen. Items can be taken home or shipped depending on availability.

“At Mastercard, we are seeing major shifts in how commerce is conducted, as people lead increasingly connected, digital lifestyles,” stated Sherri Haymond, EVP, Digital Partnerships, Mastercard.

“As the physical and digital worlds blend together, we are focused on developing solutions that provide merchants with the ability to accept payments across all technology platforms possible—in-store, in-app, online, and in AR and VR—to help drive how people will experience shopping and payments in the future.”

In Las Vegas, the partners also used the Saks Fifth Avenue brand, marks and likeness to showcase the physical retail environment.

Neeraj Bhatia, Director, Product Management, Qualcomm Technologies, Inc. said in the release, “Qualcomm Technologies’ iris authentication and extended reality technologies for Snapdragon 835 are designed to support a future generation of contextually aware commerce experiences using secure, augmented reality. We are delighted to work with Mastercard and Saks Fifth Avenue to showcase new AR experiences on ODG’s sleek smart glassed based on our Snapdragon 835 Mobile Platform.”

The partners designed a Money20/20 experience to inspire brands and merchants to dream up new ways of enhancing the in-store shopping experience. Part of it is about drive sales by delivering additional content and information during shopping, leveraging:

  • Masterpass, the digital payment service from Mastercard, and Identity Check Mobile, which enables users making purchases to authenticate with physical traits including fingerprint, facial and voice recognition software;
  • ODG’s expertise to lead the development of the AR shopping experience, as well as its award-winning extra-wide-field-of-view R-9 smartglasses with enhanced iris tracking cameras; and
  • Snapdragon 835 Mobile Platform running the Snapdragon XR SDK and iris authentication technology with liveliness detection for a superior authentication experience.

Mastercard is betting on AR to “reshape the retail environment, making it more immersive and efficient.”

Ralph Osterhout, Founder and CEO at ODG said in the release, “This solution showcases the transformative nature of augmented reality in the retail space and highlights the power and performance of ODG smartglasses and the unparalleled potential for headworn AR to change the way we see and experience the world.”

Michael Miebach, Mastercard, Chief Product Officer explained the company’s ambitions for impacting “the lives of the underbanked and underserved.”

ATO warns ride-sharing drivers about GST obligation

From Smart Company.

The Australian Taxation Office has put the hard word on ride-sharing drivers and the wider gig economy, reminding drivers working for platforms like Uber about the importance of meeting their GST obligations next tax time.

The tax office determined in 2015 that ride-sharing and ride-sourcing drivers should be classified in the same way as taxi drivers for GST purposes, meaning they must register for an Australian Business Number and for the GST even if they are under the $75,000 threshold.

Uber appealed the decision in the Federal Court earlier this year but lost, and since then the ATO has been periodically reminding drivers of their tax obligations.

However, the tax office says the message isn’t getting through, with ATO assistant commissioner Tom Wheeler saying in a statement that the tax office has notified over 120,000 ride-sharing drivers over the past 18 months regarding their tax obligations.

“We know that most drivers do the right thing, and we are now focusing attention on the minority of drivers that are not currently meeting their obligations,” Wheeler said in a statement this morning.

“Our message to taxpayers is that if you have a ride-sourcing enterprise you must get an Australian Business Number and register for GST as soon as you start driving. You also need to include the income on your tax return at tax time.”

Wheeler notes the ATO is sourcing information “directly” from banks and facilitators, and warns “we know who you are, and we know if you aren’t correctly meeting your obligations”.

“This isn’t a black economy issue,” says Lisa Greig, SME and start-up tax specialist at Perigee Advisers.

“The money’s going through Uber and into a bank account, [and] it will be found.”

Companies should remind workers of GST obligations

Wheeler says if ride-sharing drivers who have not registered for GST continue to ignore the ATO’s prompts, the tax office will register the drivers itself and then backdate the registration to their first ride-sharing payment.

“[The drivers] will be required to lodge and pay all outstanding tax obligations. Penalties and interest may also be applied,” he says.

Greig tells SmartCompany she believes many of these outstanding cases would be drivers who maybe did a few trips for a ridesharing app over a couple of weeks, made around $60 dollars, and then haven’t driven again.

“Those people still have to be registered for GST,” she says.

Businesses who employ a significant number of these ride-sharing type contractors – such as Uber – should have a “duty of care” to inform workers of their GST obligations, believes Greig.

SmartCompany understands Uber drivers are directed to the ATO’s ride-sharing information page and notified of their obligation as part of the signup process, but Uber is unable to sign them up when a driver registers on the platform, because Uber not a registered tax agent.

Other companies working with similar types of contractors should take a similar course in informing them about GST obligations, because companies should make it “as simple as possible” for workers.

However, one reason the ATO is having to chase people now might come down to the slackness of the drivers, Greig says, suggesting that signing up for an ABN and GST would likely take less time than signing up to drive with Uber.

“People who forget to register for GST are like those people who forget an old bank account has $2 of interest in it when it comes to tax time.”

Looking to the future of tax reporting, Greig says it won’t be surprising if Uber driving income is automatically detected by the tax office in future.

“But with where this is all going, in the future all your ride-sharing data will just get populated in MyTax come tax time and you won’t have to worry.”

PayPal launches solution for marketplaces, platforms and crowdfunding sites

PayPal has announced the rollout of a new product designed for customers operating larger online marketplaces, like ride-sharing platforms, crowdfunding portals, peer-to-peer e-commerce sites, room rentals platforms, and others, starting in the USA.

They say that PayPal for Marketplaces is a comprehensive payments solution for marketplaces, crowdfunding platforms, and other environments where people buy and sell goods and services or raise money. The solution is ideal if you run a multi-party commerce platform and want a flexible, end-to-end solution for processing payments.

PayPal for Marketplaces supports a variety of common business types, including:

The platform can be tailored to the business’s needs, based on how much risk they want to manage with regard to their transactions. So for example, a business can decide if they want to handle payment disputes and chargebacks themselves, or if they want to turn over that responsibility to PayPal to manage instead.

Over the past few years, we’ve seen impressive growth in marketplaces and other platforms with unique payment needs. Marketplaces have become the center of ecommerce activity. Today, more than half of consumers who shop online are making purchases on marketplaces, and global marketplaces are expected to own nearly 40 percent of the global online retail market by 2020.

PayPal has long served marketplaces — from its origins with eBay to Uber and Airbnb — but until now, we’ve supported these customers with a variety of different solutions. Today, we’re excited to share that we’ve launched PayPal for Marketplaces, an end-to-end global payment solution that can help businesses harness the capabilities of the world’s best known marketplaces. We’re beginning to roll this out globally and expect to be available to all markets in the coming months. Marketplaces like Grailed and Rocketr are already using PayPal for Marketplaces today.

PayPal for Marketplaces is a comprehensive and flexible payment solution for businesses accepting and disbursing funds — whether consumers pay using their PayPal wallet, credit cards or debit cards. Marketplace businesses—from ride sharing and room-rental platforms, to online crowdfunding portals and peer-to-peer e-commerce sites—have unique needs, like collecting commissions and fees, setting payouts and multi-party disbursements. And because of PayPal’s global reach, we can support buyers in more than 200 markets and sellers in more than 120 markets. We can also tailor our solution based on the marketplace’s need. For example, for marketplaces that don’t want to take on all of the risk, we offer solutions that allow PayPal to help manage the risk. But we also offer a solution for other marketplaces that want more control and risk ownership.

As always, PayPal offers value-added benefits like buyer and seller protection, risk- and fraud-detection capabilities and seamless checkout solutions that drive conversion for merchants. This includes  One Touch, which enables more than 70 million of consumers around the world to skip logging in to PayPal at eligible merchant sites.

Mastercard Opens-Up Access to Blockchain API for Partner Banks and Merchants

Mastercard announced in New York that it will be opening up access to its blockchain technology via its API published on Mastercard Developers.

Mastercard’s blockchain solution provides a new way for consumers, businesses and banks to transact and is key to the company’s strategy to provide payment solutions that meet every need of financial institutions and their end-customers. The Mastercard blockchain API will be part of the Money 20/20 hackathon in Las Vegas next week.

The company has tested and validated its blockchain and will initially implement the technology in the business-to-business (B2B) space to address challenges of speed, transparency and costs in cross-border payments. The Mastercard blockchain technology will complement the company’s existing capabilities including virtual cards, Mastercard Send and Vocalink to support all types of cross-border, B2B payment flows – account-based, blockchain-based and card-based.

There are four key differentiators of the Mastercard blockchain – privacy, flexibility, scalability, and most importantly, the reach of the company’s settlement network.

  • Privacy – Mastercard blockchain provides privacy by ensuring that transaction details are shared only amongst the participants of a transaction while maintaining a fully auditable and valid ledger of transactions.
  • Flexibility – Partners can use the blockchain APIs in conjunction with a wider suite of Mastercard APIs to create a range of powerful, new applications. Software development kits are available in six different languages to make the APIs even easier to integrate.
  • Scalability – Mastercard blockchain is designed for commercial processing speed and extensibility by reaching consensus between a trusted network moderator and network participants.
  • Reach – Mastercard blockchain is integrated into the company’s payment network that includes 22,000 financial institutions to move funds that have been committed on the blockchain.

“By combining Mastercard blockchain technology with our settlement network and associated network rules, we have created a solution that is safe, secure, auditable and easy to scale,” said Ken Moore, executive vice president, Mastercard Labs. “When it comes to payments, we want to provide choice and flexibility to our partners where they are able to seamlessly use both our existing and new payment rails based on the needs and requirements of their customers.”

Mastercard blockchain solution has the ability to power secure and seamless non-card payment transactions such as business-to-business payments and trade finance transactions. It also has the ability to power non- payment solutions such as proof of provenance that helps authenticate products across the supply chain.

With this proprietary solution, Mastercard hopes to create new benefits for its partners and make the commerce ecosystem easier, faster and safer. In addition to building a new solution, the company has also filed for over 35 patents in blockchain and invested in Digital Currency Group, a collaborator that builds, incubates and seeds Bitcoin and blockchain technology-related companies. It recently joined the Enterprise Ethereum Alliance to explore the possibilities of the Ethereum technology across a wide range of potential use cases, many of them well outside the scope of Mastercard’s traditional payments environment. In addition, Mastercard is also working on new use cases with startups that are a part of its Start Path Global program.

Fintech startup, Trade Ledger, launches world-first tech to help banks fight off global tech giants

Fintech Trade Ledger, claimed as the world’s first open digital banking platform has been launched, offering a complete platform-as-a-service for business lenders.

The platform, they say, will help banks assess business lending risk in real time and will so address the US$1.7 trillion global under-supply in trade finance lending, thus providing high-growth companies with much-needed working capital.

Career technologists, Martin McCann and Dr. Matthias Born, are launching a world-first lending tech for banks and traditional lenders that will help to equip them against competition from tech giants such as Facebook, Tencent, and eBay wanting to enter financial services.

Trade Ledger is the world’s first business lending platform that transforms digital data from business supply chains in real time, allowing banks to assess and regularly update credit and default risk of businesses they lend to. Currently this is only done on a one-off or infrequent basis on a very small sample of invoices, and not on any other trade documents.

The platform will finally give banks more advanced network and data analysis technology than global technology companies, in a lending segment that has long suffered from a lack of technological innovation.

“Banks and other business lenders have never been able to accurately leverage quality operational data to determine business lending risk, as a result there is a loan undersupply to the tune of AU$60 billion each year in Australia, and AU$2.1 trillion globally,” said Martin McCann, CEO and Co-Founder of Trade Ledger.

“But as the global economy increasingly transitions towards smaller, high-growth businesses, banks have an obligation to learn how to supply working capital needed by these businesses for sustained growth. If they don’t learn to do this, it’s also only a matter of time before technology giants figure out how to resolve the problem, and swoop in.

“The challenge for banks is improving both its cost/income ratio and capital efficiencies within a segment considered higher risk, and Trade Ledger offers the first open banking platform that resolves both of these challenges.

“This represents a huge opportunity for local Australian banks and specialist business lenders to export financial services globally – so long as they jump on the opportunity to do so before oversees competitors do,” continued Martin McCann.

The idea for the platform came about when the Trade Ledger co-founders realised that the increasing digitisation of business supply chains provided an opportunity to connect the business financial supply chain directly to the bank.

They also wanted to provide a way for banks’ customers to apply for funding in just a few minutes, compared to the current 30-hour average process, helping them to directly compete with more tech-savvy entrants such as fintechs and large tech companies.

“For the first time, banks and other traditional lenders will be able to use the digital information being created in supply chains to predict the exact probability of an individual invoice default at any given time,” continued Martin McCann.

“SMEs will also no longer be treated as one homogeneous, high risk group of borrowers, when differences in corporate structure, business model, cash flow need, degree of technology adoption, scalability, and a multitude of other characteristics that can change hourly all affect default and fraud risk levels significantly,” concluded Martin McCann.

NAB trialling IBM blockchain technology

From Investor Daily.

National Australia Bank is one of a number of global banks that are trialling a cross-border payments solution powered by IBM Blockchain.

IBM has rolled out a new blockchain banking solution designed to reduce settlement times for cross-border payments.

NAB is the only Australian bank involved in the trial so far, along with institutions from Argentina, Indonesia, Thailand and the Philippines, among others.

According to a statement by IBM, the solution uses a blockchain distributed ledger to allow all parties to have access and insight into clearing and settlement of payments.

“It is designed to augment financial flows worldwide, for all payment types and values, and allows financial institutions to choose the settlement network of their choice for the exchange of central bank-issued digital assets,” said the statement.

The IBM solution, which has been created in collaboration with open source blockchain network Stellar.org and KlickEx Group, is already processing live transactions in 12 currency “corridors” across the Pacific islands and Australia, said IBM.

“For example, in the future, the new IBM network could make it possible for a farmer in Samoa to enter into a trade contract with a buyer in Indonesia.

“The blockchain would be used to record the terms of the contract, manage trade documentation, allow the farmer to put up collateral, obtain letters of credit, and finalise transaction terms with immediate payment, conducting global trade with transparency and relative ease.”

The solutions is run from IBM’s open source Blockchain Platform on Hyperledger Fabric.