Italy is one of the world’s largest economies. This is due to its large number of technologically advanced manufacturing industries and significant agricultural sector. The growing economy in the country has forced banks and financial institutions to adopt new technologies to keep up with the growth. According to recent reports, about 42 more banks in Italy are officially on the blockchain bringing the number to 100. These banks are operating on the country’s blockchain network built on R3’S Corda. This was indicated in a report by the Italian banking association. The banks initially joined the blockchain project to improve their interbank data transfers. Also, to speed up settlement in early 2020. By May 2020, 55 banks had already joined the network.
Since March, the Italian banking association says that around 204 million transactions have been processed through Spunta’s infrastructure. The number is expected to rise above 350 million by the close of the year 2020.
The blockchain comes in handy as it speeds up most complicated banking processes that involve interbank reconciliation. This is a process where concerned banks agree on how much money each bank owes to the other.
At the start of the year, the Italian banking association officials said that blockchain had revolutionized the industry. What would traditionally take weeks to process can now be complete within a day. It was made possible since the blockchain keeps a verified interbank transfer record and transfer log.
Spunta was created by an Italian banking institution and was put on trial relating to interbank transfers on Corda since the start of 2018.
The Italian banks found the idea very enticing, and they decided to join the Spunta network in waves. Thirty-two banks joined in May with 23 more joinings in May and another lot of 42 more banks joining in October following the latest reports. Silvia Attanasio, head of innovation at the Italian Banking Association (Associazione Bancaria Italiana or ABI) explained:
“The benefit is related to the new standardization more than the technology itself. It’s like the rhythm you set on your metronome that sets a [faster] timeline.”
The Italian banking institution comprises more than 700 banking institutions. It states that the Italian banks are ready for the pilot digital euro.
The banks across Italy have been able to hasten the processes of double-checking the transaction logs. The R3’s blockchain has brought a change in both the process of interbank reconciliation and the exchange of data. Unlike in the past days, a reconciliation would take an average time of 30 to 50 days with a lot of unpredictability. Now reconciliation can be completed within a day. Attanasio added:
“We wanted to transform the process, to reshape the process, in order to include some key component of the distributed paradigm, and this was made possible with the distributed solution,”
The interbank agreement is contained in the Italian law. It governs the bank transfers and it was passed in 1978, which entailed banks sending physical tapes. When the interbank agreement was updated in May 2019, it now includes data standardization. But Italy has set a window between March 1 and October 1, 2020, where integration took place to form a standard that blockchain banks could use and follow the new rules governing their operations.
The blockchain comes with lots of benefits. Before Spunta, each bank would use its software for exchanging data that was relating to interbank transfers. But using Corda for data exchanges between the banks lowers the stakes than when moving fiat between the banks on a blockchain. Even if the process may fail, the worst would only be a problem with information exchange between banks, but the clients aren’t affected.
With banks joining blockchain, it means an improved interbank data transfer. Also, settlement speeds up for banks that have joined the network.