A digital bank guarantee has just been executed over a blockchain system in Australia, in what's being called a first for a commercial bank product in the nation.

Lygon, a blockchain-based platform and joint venture involving the ANZ, Westpac and Commonwealth banks, shopping center operator Scentre Group and IBM, announced the "milestone" news Wednesday, saying it began trialing its technology mid-way through 2019.

The venture's objective was to bring the 200-year-old paper-based bank guarantee process "into the digital era."

Normally in a paper-based system, validations on bank guarantees can take anywhere from a few days to a month because the process relies on cross-checking information manually. By digitizing that process, Lygon said it has demonstrated it can reduce the verification time to as little as 24-hours.

"Lygon is paperless, transparent, accessible and standardized, removing the inefficiencies, costs, and risks associated with a paper-based system," said Lygon's CEO Justin Amos. "This is the first time blockchain has been used for a commercial banking product in Australia."

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Amos added that the platform's technology can be ported to other types of payment guarantees and financial instruments, such as performance bonds and tenancy agreements.

"Landlords are not at risk of losing or holding invalid guarantees and retailers, as well as other tenants, have a simplified and fast system for providing security and accessing premises sooner," he said.