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Australian ‘Big 4’ Bank Taps Blockchain to Transfer $10 to Canada, in 10 Seconds

Last Updated March 4, 2021 2:30 PM
Samburaj Das
Last Updated March 4, 2021 2:30 PM

The National Australia Bank, one of Australia’s big four banks, successfully completed its first proof-of-concept (PoC) money transfer over a blockchain.

The banking brigade buoying blockchain keeps on rolling.

Using Ripple’s ledger technology, the National Australia Bank (NAB), successfully transferred an AUD$10 payment from an employee’s account to another banking employee account at the Canadian Imperial Bank of Commerce (CIBC).

Smart contract alliance

The NAB, along with Toronto-based CIBC – one of Canada’s ‘big five’ banks and Bank Leumi – Israel’s biggest bank are a part of an alliance  that has agreed to the sharing innovation strategies and information among themselves as a means to co-developing new features to streamline banking.

The transfer took 10 seconds to process and settle. It is believed that IBM also participated in the experiment, presumably in providing the software and cloud infrastructure.

In statements reported by the Sydney Morning Herald, NAB executive general Manager Jonathan Davey stated:

We believe that the technology has the potential to not only deliver real-time international payments, but also improved security and efficiency of our payments systems, so this is an important piece of work.

The “international banking innovation alliance” will also see the three banks design and develop products and services, while sharing costs and testing their products in three different environments.

At the Blockchain Races

Davey’s comments show that banks are left with no choice but to explore blockchain innovation, or face the risk of Fintech breakthroughs uprooting the traditional banking structure.

He stated:

We’re competing in a rapidly changing world. Everyday, new fintechs are challenging the status-quo; we have to not just keep up, but also find ways to get in front.

The alliance raises the possibility of ultimately seeing blockchain adoption in the banks’ markets, particularly in Australia and Israel. The NAB and Bank Leumi are the largest small and medium enterprise (SME) banks in their respective countries, which represents plenty of potential for increased usage of distributed ledger technology.

The NAB is also a part  of the R3 private banking consortium that explores and develops blockchain technology for the financial services industry.

In July this year, another banking transaction over a Ripple-developed blockchain saw a payment of CAD$1,000 transferred from ATB Financial, a Canadian financial institution to ReiseBank AG, a German bank. That transfer took 20 seconds.

Featured image from iStock/Nils Versemann. Image from Shutterstock.