Italian banks test blockchain for interbank reconciliations

Italian banks test blockchain for interbank reconciliations

The Italian Banking Association (ABI) has opened a pilot project on blockchain-based interbank reconciliations to a first group of 14 lenders.

The work group, composed of the participating banks and ABI Lab, is using R3's blockchain-based Corda platform to bring more visibility to exchange of interbank transactions, verifying the matching of correspondent accounts and highlighting discrepancies for automated remediation.

First previewed in December, the new process will make bilateral channels available through which each counterparty can exchange information via a series of smart contracts providing real-time feedback on transactions passing over the network. ABI Lab is collaborating with NTT Data for development of the application and SIA as provider of the node infrastructure and verification process.

SIA in November announced plans to set up a 600 node network for bank clients, government agencies and corporates to connect to blockchain apps developed by the R3 consortium.

Banking co-operative Swift has been running its own proof-of-concept trials on the use of distributed ledger technology for nostro account reconciliation via Hyperledger Fabric v1.0 technology. While the PoC proved a resounding success, it threw up a number of significant operational challenges that would need to be addressed in advance of a commercial roll-out.

By restricting use to national banks, the Italian experiment could overcome the issues of scale facing a global provider like Swift.

The 14 banks involved in the ABI tests include: Banca Mediolanum, Banca Monte dei Paschi di Siena, Banca Sella, BNL BNP Paribas Group, Banca Popolare di Sondrio, Banco BPM, CheBanca! - Mediobanca Group, Credito Emiliano, Crédit Agricole, Credito Valtellinese, Iccrea Banca, Intesa Sanpaolo, Nexi Banca, Ubi.

After an initial test phase, it is expected that the pilot will be extended to a larger number of banks.

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