Banking News

Italian banks reach pre-production for interbank blockchain

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Last week the Italian banking association Associazione Bancaria Italiana (ABI) said it is entering the pre-production stage of its “Spunta Project” which is a blockchain platform for interbank reconciliations. The number of participants in the ABI Lab initiative has grown from 14 banks four months ago to 18. They represent 78% of Italian banks by number of employees.

Three technology companies support the project. NTT Data is the developer. Italian enterprise network company SIA is providing the network infrastructure. SIA also supports 40% of SEPA transactions which is the primary payment mechanism in Europe. And the platform is based on R3’s Corda blockchain protocol.

By sharing data between any pair of banks, it should eventually eliminate the need for reconciliations between banks.

The platform has passed several tests, but there’s still some work to do. One area is intra-group reconciliations. Another task is the creation of reports for auditors. Additionally, they plan to refine the matching algorithm.

At the network level, there are plans to test the platform stability and to simulate production transaction volumes for 365 days.

Any project that potentially can eliminate reconciliations is fertile ground for blockchain. Last year SWIFT ran a blockchain proof of concept (PoC) and concluded it was not scalable. That’s less of an issue for Corda because it only stores transactions between the participant banks.

However, one of the unpublished issues with the SWIFT PoC was the fact that the Nostro accounts had a mix of blockchain and non-blockchain transactions. That has the potential to eliminate the reconciliation benefit. Given the advanced stage of the ABI Labs project, it appears that’s not an issue.