A new Italian consortium of thirty banks and organizations has formed to leverage blockchain for a national digital sureties project “Fideiussioni Digitali”. Major participants are CeTIF (Research Centre on Technology), payments network firm SIA and tech company Reply. Four months ago, the group first announced plans for the project in conjunction with the Bank of Italy and IVASS, the insurance regulator.
Apart from the addition of thirty banks, the Italian finance police Guardia di Finanza has also joined.
Sureties are often required for government and construction contracts. To participate in the contract, the supplier pays a bank or insurer for a surety bond. This provides a guarantee to payout the buyer if the supplier fails to perform on the contract.
In Italy, there has been rampant fraud in the sector, with companies paying for surety bonds but it turned out they were fake. The fraud amounted to €1.6 billion ($1.76 billion) in the last four years. If blockchain is used for logging the issue of the surety bonds, only authorized banks can write to the blockchain. That way, the sureties are digitalized and notarized to verify the guarantor is legitimate.
While the primary motivation is fraud prevention, the solution will also enable greater efficiency and transparency.
During the last four months, the group conducted a feasibility study. The next phase is to develop a solution. At some point between July and October, legally valid sureties will be uploaded to the blockchain as part of a Sandbox environment. The project leverages R3’s Corda enterprise blockchain technology.
Two other blockchain surety bond projects include one with Accenture and insurer Zurich, and another for real estate development in Australia involving property company Scentre Group, IBM, ANZ, Commonwealth Bank and Westpac.
The organizations participating in Fideiussioni Digitali are: Acquedotto Pugliese, ANCE Lombardia, ANCI Digitale, ANCI Lombardia, AON, ASMEL, Assolombarda, Banca Mediolanum, Banca Monte dei Paschi di Siena, Banca Popolare di Puglia e Basilicata, Banca Popolare di Sondrio, Banco BPM, Cattolica Assicurazioni, CEDACRI, Bari Municipality, Milan Municipality, Confindustria Digitale, CONSIP, HERA, ICCREA Banca, InfoCamere, Innolva, Intesa Sanpaolo, Poste Italiane, Reale Group, ARIA – Regione Lombardia, Sicily Region, Roma Capitale (Rome Municipality), Terna, and VIVIgas energia.