A group of 14 Italian banks working on a blockchain trial has successfully passed the first phase of technical procedural verification, with work now being done on a substantive test of the processes in the field.

Two months’ worth of data - or 1.2 million movements - was uploaded to the infrastructure that corresponds to the banks working on the ‘Spunta Project’. A statement noted the performance was good, so the next test will involve participating banks working on a daily basis with the new application based on distributed databases.

The project, which is being carried out by ABI Lab, the banking research and innovation centre promoted by the Italian Banking Association, is seeking to implement blockchain to interbank processes. The objective is to provide data transparency and visibility, faster transaction execution and the possibility of performing checks and exchanges directly within the application.

With the blockchain, data is not stored on a single computer but is distributed on several interconnected machines, meaning transaction management is shared between several nodes on a network. Without having to rely on a single centralised entity, this distributed ledger technology (DLT), changes the exchange of value between participants.

The scope of this project is interbank reconciliation, which verifies the matching of correspondent accounts that involve two different banks. The application of DLT can improve specific aspects of current operations that can result in discrepancies that are difficult for the banks to manage, according to ABI Lab.

“Among these is the time needed to identify transactions between banks that do not match; the standardisation of the process and the single communications protocol; and the visibility of the transactions between parties.”

The work group selected the Corda DLT platform developed by R3, in collaboration with Ntt Data, for development of the application, and Sia as provider of the node infrastructure. The work is based on the enterprise version of the platform, which was released last June, with modifications developed specifically for the Spunta project.

The new process will make bilateral channels available through which each counterparty can exchange information. Through the use of the DLT platform and the implementation of Smart Contracts, it will be possible to provide automatic feedback on bank transactions, thus simplifying and accelerating the reconciliation process.

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