Blockchain is a technology for storing and transmitting information that is transparent, secure and operates without a central control body. Today, many sectors of the economy, such as banking, are integrating this innovation into their practices to gain in time, efficiency and competitiveness.
An application to improve interbank transactions
Blockchain seems to be increasingly present in the banking sector. In April, ABI launched its first application based on R3's Corda, an open source platform that aims to facilitate financial agreements between institutions. Called "Spunta Banca DLT", it is designed to connect the entire national banking system, enabling the association to reduce its operating costs. More specifically, the application will serve as a register for all interbank transactions, and will enable the rapid detection of mismatches between sums transferred from one institution to another, an operation that used to take several days.
32 banks are taking part, including Banca Mediolanum, Banca Monte dei Paschi di Siena, Intesa Sanpaolo, UBI and UniCredit, as well as the Italian subsidiaries of BNP Paribas and Crédit Agricole. A further 23 players are expected to join in the coming months.
Spunta Banca DLT goes into production in Italy
Italian banks have already started using Spunta Banca DL, and the pilot tests carried out in January and February proved conclusive. Until now, bank reconciliation in Italy has been based on loose bilateral registers. The application now aims to digitize the entire process of reconciling transactional flows generating accounting entries in the accounts held by each of the banks with their counterparts.
According to David E. Rutter, Managing Director of R3, this is "one of the most significant digital transformations in the interbank financial services sector to date".
Is blockchain the future of banking?
Investment in blockchain could reach more than €10 billion by 2022, according to a report by IDC. Those investing the most in this technology are the USA, China, Western European and Asia-Pacific countries.
Blockchain is developing rapidly in the banking sector, as demonstrated by the project launched by the Italian Banking Association in 2020. It has to be said that it is a source of opportunities for banks by cutting out intermediaries and decentralizing transaction and validation processes.
There is every reason to believe that banking institutions will make greater use of this technology in the coming years, by adapting it within existing systems, developing in-house private or semi-private Blockchains, and partnering with startups belonging to this ecosystem. One example is American fintech R3CEV, a specialist in asset transfer and cryptographic security, which has created an unprecedented alliance with nine banks, including Goldman Sachs, JP Morgan and UBS, to define common standards for setting up interbank blockchains.