Italian banks are now looking to cut their cost of operations with the help of a distributed ledger technology (DLT) application. According to a Tuesday report, the central bank of Italy, known in Italian as Banca d’Italia has been working behind the scene to integrate blockchain into the country’s core banking system.
Reducing Operational Cost With DLT
The initiative is promoted by the Italian Banking Association (ABI), one of Italy’s oldest banking associations founded in 1919. Dubbed “Spunta Banca DLT” application, the blockchain platform will connect banks in the domestic banking system to enable them swiftly reconcile account discrepancies.
Italian banks will also gain full visibility of all the information about the accounts 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 accomplish. They will also be able to manage pending transactions, which will help reduce operational risk across the system.
The application is powered by R3’s Corda, an enterprise blockchain infrastructure for businesses. Speaking on how DLT will help the Italian banking system, Charley Cooper, managing director at R3, said the country’s banking system has been having difficulties reconciling interbank transfers for many years, and DLT is a perfect fix for the problem.
The Spunta Banca “removes the pain of reconciling mismatches that used to take days or weeks to resolve. Mismatches can now be spotted and reconciled immediately,“ Cooper added.
All Italian Banks To Adopt Blockchain
In the pilot phase during the first quarter of 2020, 18 banks tested the system covering 7 million transactions on real data. The number of financial institutions in the network has increased to 32, including leading institutions like 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 application. Another wave of 23 banks is expected to join the bandwagon in May, with all Italian banks expected to join the system by the end of 2020.
SIA Joins As Technology Partner
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 announced in late April that it has joined the ABI’s DLT project, and the Spunta Banca is now based on SIAchain, a private blockchain infrastructure designed by SIA that enables financial institutions and businesses to develop and implement blockchain-based applications.