Blockchain for Banking Capital markets News

SIA, Wizkey to tokenize debt, non performing loans for banks to trade

npl nonperforming loans

Today SIA unveiled a partnership with Italian blockchain fintech Wizkey. The startup uses the Ethereum network to tokenize financial assets. The joint solution plans to enable financial institutions – banks and funds – to trade loans and other debts, including securitized non-performing loans (NPLs).

This will all happen on SIA‘s secure infrastructure, linked to the public Ethereum network to guarantee full transparency. SIA’s infrastructure is used by banks for SEPA payments and card processing services.

“The main objective of this project launched together with Wizkey is to support banks in managing credits, especially non-performing ones, in a standardized and secure manner in line with the indications of European regulators”, said Daniele Savarè, Director of Innovation & Business Solutions at SIA.

Wizkey’s technology works by creating a debt portfolio in what it calls a ‘room’. This contains all the documents and due diligence activities that support the portfolio, which are verified using blockchain technology. Hence the transparency this enables should improve the portfolio’s pricing.

“It is increasingly evident that we need technologically advanced tools to deal with the next wave of NPLs, which is closely linked to the current recession and will manifest itself even more vigorously in the coming years,” said Marco Pagani, CEO and founder of WizKey. 

“The partnership with SIA is a key starting point to promote a systemic initiative for all financial operators in the context of a new Italian digital renaissance. Thanks to an exponential improvement of the technology infrastructure, it is already possible to create a transparent, liquid and efficient secondary market for NPLs thus benefiting the entire country system.” 

Last year, in Italy Centrotrenta an administration company for debt securitization, also unveiled a blockchain initiative. In the U.S., WSFS  and Figure are also using blockchain solutions.

Meanwhile, SIA has been at the center of some of the largest blockchain initiatives in Italy. It’ network is used as part of the production Italian banking blockchain initiated by ABI with more than 100 banks automating interbank reconciliations.

Italy has struggled with significant fraud in the surety bond sector, and SIA and the Italy’s central bank are participants in a blockchain solution to address the problem.

Update: The article has been updated regarding the use of public Ethereum based on a clarification request made by Ledger Insights

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