Italian banks launch their blockchain revolution with Spunta Banca DLT

At the end of April, 32 Italian banks launched an application on the private blockchain technology Corda (R3). The objective of the Spunta Banca DLT project: digitalization and improvement of interbank transactions.

The transformation of the banking sector into Italy ultimately did not come from fintechs, but from banks themselves. Meeting within the Italian Banking Association,ABI (Associazione Bancaria Italiana), establishments have put their first production into production blockchain application.

In terms of the interbank information network (IIN), JPMorgan certainly served as a benchmark until today. Spunta Banca DLT could also be a small revolution in the banking world, however.

All banks on the blockchain by the end of 2020

The distributed registry application aims to connect the entire national banking system. To design this first brick, the ABI relied on the permissible blockchain platform Corda of R3.

Since the end of April, 32 banks in Italy joined one of the first large-scale blockchain deployments on the interbank markets. And 23 additional banks will join the platform in the coming weeks. By the end of 2020, all establishments operating in the country will have integrated it.

The blockchain must therefore respond to a major problem for banks in Italy: the reconciliation of interbank transfers. DLT technology is only one part of the project, however.

Detect and resolve errors in real time

It is more generally a question of digitizing the entire process of reconciliation of transaction flows generating accounting entries in the accounts held by each of the banks with their counterparts.

The scope also includes the management of pending transactions. Spunta Banca DLT must therefore help reduce operational risk throughout the Italian banking system. Information relating to these accounts and transactions is now easily accessible and shared.

Spunta Banca DLT therefore acts as a back-office platform allowing to standardize the bilateral reconciliation of transactions between Italian banks. Digitization also opens up the possibility of carrying out daily checks on these operations, rather than monthly. Finally, the system automatically detects errors and resolves them in real time.