Blockchain Tech Is an Opportunity Not a Threat, Says Westpac’s CEO

Blockchain Tech Is an Opportunity Not a Threat, Says Westpac’s CEO

By Onose Enaholo - min read
Updated 26 January 2023

Blockchain technology is “more of an opportunity than a threat” and has the potential to dramatically reduce the costs of payments infrastructure, Brian Hartzer, CEO of Westpac Banking Corp., told the Sydney Morning Herald on Monday.

“We are quite intrigued about the possibility of bringing real efficiencies into some of our payments infrastructure and the like through the use of blockchain,” he told the media outlet.

“In focusing on the use of the blockchain, we see it as far more of an opportunity than a threat. It increasingly looks like there is something in it. It is not surprising banks around the world are starting to say what is this and how can it help us?”

Westpac, which announced in June it had been trialing the Ripple protocol for real-time global currency settlements, has produced encouraging results, Hartzer indicated.

“I am told by the people involved in it that that’s a very sophisticated and advanced proof of concept,” he said.

Westpac, but also the Australia and New Zealand Banking Group and the Commonwealth Bank of Australia (CBA), are all three testing out payment technology from Ripple Labs.

Westpac’s general manager of global transactional services Rachel Slade told the Australian Financial Review in June that the bank has developed a solution that is faster than other alternatives currently available in the market allowing same or next-day payments.

“This technology could be very beneficial to all Australians, providing a low-cost and fast method of sending low-value payments overseas,” Slade said.

CBA and the National Australia Bank have both joined R3, a blockchain consortium of the world’s largest banks and financial institutions that aims to draw up industry standards and protocols for using distributed ledgers technologies in finance and banking.

Last week, R3 announced that three additional major banks, namely Mizuho Financial Group, Nordea and UniCredit, have joined the alliance, taking the total number of banks collaborating on the project to 25.

“Participation in the workgroup will have a strategic relevance for UniCredit as it will ensure a long-term vision and competitive advantage on innovative methodologies and technologies, which are opening a new era in the financial and capital markets,” said Paolo Fiorentino, Deputy General Manager of UniCredit.

“This will allow UniCredit to play a leading role in the upcoming revolution of the financial products and payment services, as well as in the overall banking industry proposition.”

Meanwhile, it has been reported that the Australian Securities Exchange (ASX) is considering using blockchain technology to replace its current clearing and settlement system, known as the Clearing House Electronic Subregister System (CHESS).

“We see CHESS replacement as a one-in-20-year opportunity,” Elmer Funke Kupper, Managing Director at the ASX, told the Australian Financial Review last week. “We’re thinking about whether there are smarter ways to do things – to remove a lot of administrative costs and reconciliation costs from the back end of investment banking and broking, and this is where blockchain could be potentially quite helpful.”

He continued:

“We are looking at what we can do to bring end-to-end efficiencies, and we have people looking very closely at blockchain to see if we can create efficiencies for our clients, investors and companies.”