The use of blockchain for exchange of data for interbank reconciliation has reduced the average time from 30-50 days previously to now under a day. The Italian Banking Association is also exploring other potential use-cases of blockchain.
The Italian Banking Association has been making fast and swift moves to move towards blockchain-based platforms. Three weeks back, speaking at a digital Unitize blockchain conference, the chief innovation officer od the association of Italian banks Silvia Attanasio said that the association has decided to adopt a decentralized blockchain-based system dubbed Spunta, built atop the Corda blockchain network.
The ABI (Associazione Bancaria Italiana) chief said that the process of interbank reconciliation needs a major overhaul. She also added that the technology for data exchange also needs to change. Earlier before moving to the blockchain, the reconciliation took a very long time and was highly unpredictable. The average time for reconciliation was anywhere between 30-50 days. Now, using the R3‘s Corda blockchain network, reconciliation happens just under a day’s time.
Earlier this month, the ABI chief said that it was absolutely necessary for the association to choose the decentralization route. If they hadn’t, they needed to move the centralized party to gather and manage a large chunk of data. “It wasn’t so easy to identify a single actor that could have run the centralized solution,” she said.
Italy’s information technology company NTT Data developed the blockchain network. Currently, the bank’s technology company SIA operates it.
Italian Banks Are Entering Phase 2 of Blockchain Project
The project has already entered phase two and nearly 85% of the banks i.e. 55 banks in total are currently using this platform to share interbank transfer data. The third and final phase of the release will happen in October 2020. By that time, the association expects nearly 70-100 banks to have already joined the platform.
“The benefit is related to the new standardization more than the technology itself,” Attanasio said. “It’s like the rhythm you set on your metronome that sets a [faster] timeline.”
Before the decentralized blockchain Spunta platform, each bank had its own software to exchange data related to interbank transfers. Demetrio Migliorati, head of blockchain at Banca Mediolanum said that using the Corda blockchain network to exchange data also involves lower-stake compared to exchanging fiat on the blockchain.
“If we failed in this process, the worst thing that could happen was to have a problem in the information exchange between banks,” she said. “Clients are not affected, the companies are not affected. It was a natural sandbox.”
Implementing the blockchain-based exchange of data has also opened new use cases. Some banks have also started sharing KYC data and credit guarantees on the Spunta network.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.