Italian banks develop blockchain for bank transactions

Italian banks develop blockchain for bank transactions

By Nicholas Say - min read
Image of Italian flag on building

A huge 85% of Italian banks have adopted blockchain as a solution for interbank reconciliation

The ABI (Italian Banking Association) successfully integrated R3’s Corda blockchain into the Italian banking system. Called “Spunta”, the project seeks to improve the interbank transaction reconciliation system — the result of a collaboration with many Italian banks.

Interbank transaction reconciliation is a bookkeeping practice between financial institutions that verifies records and crosschecks bank transactions. The process is complicated, requiring an average of 30 to 50 days to complete.

In this time, conflicts between two parties could ensue and the process could drag on even longer.

By introducing blockchain into the process, the reconciliation process can be done in just 24 hours. Its purpose is to quickly detect and mark matched and unmatched transactions on a private platform between participating banks.

Charley Cooper, an expert at R3, commented:

“It removes the pain of reconciling mismatches that used to take days or weeks to resolve. Mismatches can now be spotted and reconciled immediately “

Reports of the reconciliation will be automated, increase response time, eliminate human error and ensure high transparency.

A pilot version of Spunta was introduced in 2018 with 14 banks participating. Today, 85% of Italian banks are working with the system.

Finishing its first trial, which lasted ten months, last October, the project is now entering its second trial with 55 Italian banks using the platform. It is expected to move into its final stage in October 2020, with even more potential participants.

Benefits for early recovery

With Covid-19 still looming over the Italian economy, this new technology could potentially save the Italian financial industry a tremendous amount of time and money — offering extra solutions for other financial services and fast-tracking an economic recovery when the pandemic eases.

Italy to fast track blockchain integration

ABI has made blockchain one of its priorities in recent years, lobbying for an overall decentralised banking industry, with the digitisation of the interbank reconciliation system being one of its primary projects.

ABI is also pushing for the implementation of cryptos that are backed by the European Central Bank.

The target of this project is to increase consumer confidence in cryptocurrency by streamlining the adoption of digital currencies, ensuring monetary stability, while also following the regulations of the European regulatory framework.

Other countries, such as China, Japan and the US, are also in the race to integrate blockchain and create crypto regulations.