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Australia’s blockchain scene is buzzing, as organisations ranging from startups to the country’s largest banks and government agencies look to harness the technology.
The Commonwealth Bank (CBA), one of Australia’s “big four” banks, is using blockchain technology to collapse the red tape around issuing government bonds.
CBA is under a World Bank mandate to arrange the first bond to be created, allocated, transferred and managed using blockchain technology.
The Australian Dollar Kangaroo bond, known as the bond-I or Blockchain Operated New Debt Instrument, is looking to raise A$50m (US$35.4m) and act as a proof of concept for using blockchain to bring better efficiency and transparency to global capital markets.
In July, the CBA completed a blockchain-powered global trade experiment where a shipment of almonds was tracked from the grower in Sunraysia, Victoria to Hamburg, Germany.
In the experiment, the orchard, rail haulage line, shipping port, stevedoring company and shipping carrier were connected and the shipping container information, task list and shipping documents were housed in a purpose-built blockchain, while internet of things (IoT) devices tracked the condition of the nuts by measuring temperature and humidity in the container.
At a global level, Australia chairs the International Standards Organisation (ISO) committee on blockchain and distributed ledger technologies through financial services veteran Craig Dunn, who is also chair of Stone and Chalk, Sydney’s fintech hub and a member of the Financial Services Advisory Committee to the federal treasurer.
Australian governments, both state and federal, are keen to both use blockchain to improve efficiency in their own processes and to see local enterprise benefit from productivity gains, as well as helping make the country a global leader in blockchain development.
In the federal budget released in May 2018, the Australian government directed its Digital Transformation Agency (DTA) to “investigate areas where blockchain technology could offer the most value for Government services” and set aside A$700,000 from the DTA’s budget to fund the blockchain exploration program.
DTA is exploring the potential of blockchain technology in federal payment systems such as welfare and in the National Disability Insurance scheme.
Australia’s newly-minted prime minister, Scott Morrison, who was installed in August following a leadership spill by the ruling coalition government that saw the end of Malcolm Turnbull’s prime ministership, is a fan of fintech, open banking and the technologies such as blockchain that will drive Australia’s future.
As treasurer, before being installed as prime minister, Morrison urged attendees at the Australian Fintech Awards in early August 2018 to take advantage of the disruption wave sweeping through the global economy.
“I am frankly counting on you not to stuff this up. You need to make this work…In today’s global economy, the ability for economies to become more productive is not being done the old way: the biggest transformer of productivity [will be] innovation,” he told attendees at the awards, as reported by the Australian Financial Review.
Consumer data law to bolster adoption
Australia is in the process of enshrining a consumer data right in law that will require businesses to give customers their account data or send it to an accredited third party on customer request. This is expected to drive all forms of fintech, including blockchain.
The banking sector will come under the new right in July 2019, followed by the energy, utilities and telecommunications sectors, while the legal sector is set for disruption as a new, blockchain-powered, national legal contract platform is developed.
A consortium comprising Data61, the data unit of the Commonwealth Scientific and Industrial Research Organisation (CSIRO), law firm Herbert Smith Freehills and IBM is building Australia’s first cross-industry platform to let businesses collaborate using blockchain-based smart legal contracts.
The platform is called Australian National Blockchain (ANB), with a pilot expected before the end of the year. If the pilot is successful, the consortium intends to roll out the platform to offshore markets.
Benefits for Aussie enterprises
Data61 delivered two reports to the Australian treasury in 2017 that identified opportunities for blockchain deployment across government and industry.
“Our reports identified distributed ledger technology as a significant opportunity for Australia to create productivity benefits and drive local innovation,” said Mark Staples, senior research scientist at CSIRO’s Data61 in a statement.
“For complex enterprise contracts, there are huge opportunities to benefit from our research into blockchain architecture and into computational law. Smart contracts have many applications, and as the ANB progresses we look forward to exploring other business use cases to roll out.”
In South Australia (SA), state premier Steven Marshall, wants blockchain technology development to be part of SA’s economic growth.
Marshall has said he sees blockchain as a technology that will cross all industries. There will be a global blockchain summit in March 2019, held in the Adelaide Exhibition Centre, put on by the ADC Forum in collaboration with the SA state government.
The summit will see entrepreneurs, financiers and regulators from overseas mixing with local counterparts, and is expected to act as a catalyst for advancing blockchain development in the state.
Read more about blockchain
- Companies need to ensure that rushed blockchain and other new technology projects are not introducing security vulnerabilities by gaining granular visibility of network activity, according to RSA Security.
- The adoption of blockchain technology is likely to increase in the consumer goods industry as more businesses use the technology to address fraud and improve supply chain management.
- By doing away with a central authority in IoT networks, blockchain technology can reduce the risk of IoT devices being compromised by a single point of security failure.
- The decentralised nature of blockchain networks may deter some cyber crooks, but ASEAN organisations still need to pay heed to the security of their blockchain infrastructure.
Meanwhile, the Australian Securities Exchange (ASX) is building a clearance and settlement system that uses the distributed ledger technology inherent in blockchain. The new system is expected to go live in early 2021.
The distributed ledger platform will let stockbrokers, fund managers and other securities custodians cut costs because they will no longer have to operate securities reconciliation systems between themselves and the ASX. The platform will allow everyone to know in real time that their holdings records match those at the ASX.
While there is plenty of blockchain exploration going on in Australian organisations, there is a long way to go before the technology becomes standard fare both in Australia and overseas.
A recent Gartner survey found that less than 1% of CIOs globally had deployed or invested in blockchain projects. The survey polled 3,138 respondents globally, including over 100 Australian and New Zealand CIOs.