Australia's ANZ Bank and U.S.'s Wells Fargo to test distributed ledger technology

Wells Fargo and ANZ have jointly created a prototype of a shared distributed ledger platform for agency banking to reconcile payments and settle accounts.

For decades, in a business process facilitated by SWIFT, banks have established correspondent relationships with foreign partners to use their local payment systems and currencies to conduct cross-border transactions.

However, because the system mainly relies on banks to open current accounts with foreign suppliers in foreign banks, the bills are finally divided into two independent versions that need to be maintained and coordinated separately.

ANZ and Wells Fargo said the practices led to poor payment transparency, cumbersome reconciliation and investigation work, delayed notification of funds disbursement, and inefficient management and use of liquidity and funding.

Both believe that blockchain can help solve the above problems by creating a single account record that can be shared and maintained by many correspondent banks.

Wells Fargo and ANZ have released a proof-of-concept for a shared distributed ledger platform that they say has the potential to improve the efficiency and speed of cross-border correspondent banking reconciliation and settlement, while running parallel to existing infrastructure.

Nigel Dobson, general manager of payments transformation at ANZ, said: “The success of our proof of concept demonstrates what can be achieved when technology and business innovation collaborate across industries.”

Dobson hopes that the results of this successful test will form the basis for future cross-industry discussions and knowledge sharing.

“While this collaborative project has advanced our collective thinking on innovation in this space, the network nature of the problem and our proposed distributed ledger solution will only be achieved through broad industry participation and adoption,” he said.