Italian banks are now looking to reduce their operating costs with the help of a distributed ledger technology (DLT) application. According to a report on Tuesday, Italy's central bank, known in Italian as Banca d'Italia, has been working behind the scenes to integrate blockchain into the country's central banking system.
The initiative is promoted by the Italian Banking Association (ABI), one of the oldest banking associations in Italy founded in 1919. Dubbed the “Spunta Banca DLT” application, the blockchain platform will connect the banks in the national banking system to allow them to quickly reconcile account discrepancies.
Italian banks will also gain full visibility of all account information on the platform without going through the traditional process of making many phone calls and involving numerous parties, all of which take days or weeks to achieve. They will also be able to manage pending transactions, which will help reduce operational risk throughout the system.
The application works with R3 corda, an enterprise blockchain infrastructure for companies. Speaking about how DLT will help the Italian banking system, Charley Cooper, managing director of R3, said the country's banking system has struggled to reconcile interbank transfers for many years, and DLT is a perfect solution to the problem.
“The Spunta Banca eliminates the pain of reconciling the imbalances that used to take days or weeks to resolve. Misalignments can now be detected and reconciled immediately, "added Cooper.
In the pilot phase during the first quarter of 2020, 18 banks tested the system covering 7 million transactions with real data. The number of financial institutions in the network has increased to 32, including leading institutions such as Banca Monte Dei Paschi di Siena, Banca Mediolanum, UBI and UniCredit.
Italian operators of foreign banks such as BNP Paribas and Crédit Agricole are also currently using the app. Another wave of 23 banks is expected to join the train in May, with all Italian banks joining the system by the end of 2020.
The project started almost two years ago, and R3 has been working alongside ABI Lab and other technology partners, including SIA and NTT Data.
The SIA project ad In late April it had joined ABI's DLT project, and Spunta Banca is now based on SIAchain, a private blockchain infrastructure designed by SIA that enables financial institutions and companies to develop and deploy blockchain-based applications.