Commonwealth Bank of Australia has partnered with CSIRO’s Data61 group to pilot a blockchain-based programmable money app.
The ‘smart money’ app – called Making Money Smart – is being tested within the context of the National Disability Insurance Scheme (NDIS).
The prototype app – enabled by a blockchain token solution – attaches conditions to money so that it “knows what it can be spent on, who it can be spent by and when it can be spent”.
The NDIS proved a fitting proof of concept as it involves highly personalised conditions around payments. In the NDIS, participants have individual plans that can contain multiple budget categories – each with different spending rules.
"Programmable money represents an opportunity to re-envisage how we think about money and how payments function across the economy," said CBA’s Sophie Gilder, head of experimentation and blockchain. "The potential of this technology for the NDIS is exciting, ranging from greater empowerment for participants, reduced administration costs for businesses and greater visibility for Government.”
The use of blockchain technologies in government payments was highlighted by Data61 in its 2017 report Risks and Opportunities for Systems Using Blockchain and Smart Contracts.
Smart contracts “could automate the process coordination to apply for, decide on, and distribute payments for grants and social security,” the report states, adding that “with a sufficiently-sophisticated payment environment, a smart contract could automatically limit payments to approved suppliers or categories of expenses”.
"This has been a really interesting research project into how blockchain technology can integrate with new payments technologies to provide more choice, control and flexibility for conditional payments for NDIS participants and service providers," said Dr Mark Staples, senior principal researcher in the software and computational systems program at Data61.
"We're particularly interested in the broader research opportunity around programmable money, because it should reduce friction in business transactions, and enable companies to create new business models and innovative ways of delivering and paying for products and services. This would benefit customers and reduces the administrative burden involved in managing payments," he added.
In the NDIS proof of concept – currently under testing from NDIS participants and carers – enables individuals to find, book and pay for services from service providers without the need for paperwork or receipts.
The Digital Transformation Agency, National Disability Insurance Agency, Department of Social Services, Department of Human Services, The Treasury, Reserve Bank of Australia, Disability Advocacy Network, Ability First Australia, National Disability Services, New Payments Platform Australia, Australian Digital Commerce Association and FinTech Australia have given their input and feedback to the project.
"Given the complexity with the subject matter, we knew we needed to collaborate with a diverse range of government and industry leaders," Gilder said.
"We threw open the doors and the response has far exceeded our expectations. This has been a key factor to the success of the project thus far and we are very grateful for their input," she added.
In May, Budget documents revealed the government’s Digital Transformation Agency (DTA) would “investigate areas where blockchain technology could offer the most value for government services”.
CBA and Data61 will release a co-authored Making Money Smart report next month, which will assess the benefits and limitations of the blockchain based system for the NDIS use case.