Ecosystem Zoom in Series: Italy
The Largest distributed ledger project, outside of major crypto’s.
Back in December of 2017, the Italian Banking Associations’ (ABI) Spunta project started, giving way to the largest distributed ledger project outside of major cryptocurrencies. It all started when ABI Lab and NTT Data Italia started working on a blockchain POC for straight-through processing of interbank reconciliations using R3’s Corda platform. Since then, SIA has also come on board as a technical partner. The total collaboration team comprises the following:
- 17 industry-leading banks, including Intesa Sanpaolo and Banca Mediolanum
- ABI Lab: A consortium of 150 banks and 60 ICT providers, focused on research into the use of innovative technologies to manage processes, channels, and security in banking
- NTT Data: A leading global IT innovator, delivering technology-enabled services and solutions to clients around the world
- SIA: European leader in the design, creation and management of technology infrastructures and services for financial institutions, central banks, corporates and the public sector
- R3: The enterprise blockchain software firm, working with a broad ecosystem of more than 200 members and partners across multiple industries from both the private and public sector
Demetrio Migliorati, Head of Blockchain at Banca Mediolanum, tells us the unusual story of how the project came to be. “..18 different banking groups, 50 banks, meeting with the desire of working together in a coopetition constructing something different. This is absolutely singular.” You are right, Demetrio. It is singular as it is unique. These levels of cooperation and coopetion do not usually go any further than conference panels. Yet here we are. This project will make Italy “the first and only entire country banking sector working together with Corda … And it is coming from a country that has not been very well known for being ahead on the technology trends.”
“Spunta” is a word surely familiar to Italians in the Banking sector, and one to probably be the cause of many a headache. Is the current reconciliation system for interbank transactions in Italy, and, as you expected, it is notoriously complex. The aim of the process is to ensure that the banks at each end of a transaction are in complete agreement about every aspect. However, if the banks don’t agree, then resolving the mismatch can be labour-intensive and time-consuming, partly due to the lack of a standardized procedure and communication method.
Now, thanks to this otherworldly collaboration, there is a faster, more efficient and more transparent way of reconciling interbank transactions. ‘This new system is the product of their collaboration; a successful POC for a blockchain-enabled interbank reconciliation system based on R3’s Corda Enterprise. The trial ran for 10 months and concluded in October 2018, with the participating banks processing a total of 1.9 Million transactions. The project confirmed an interbank system underpinned by R3’s Cora Enterprise blockchain platform can help the counterparties on each side quickly identify and address any mismatched transaction, boosting speed and transparency while reducing cost and effort.’
With the POC successfully completed, the group moved onto testing the solution in daily operations in 2019. ABI says that:
“the test simulated the production with the one-year volumes of 200 banks. The loading and the Data reconciliation took place in a geographically distributed environment and connected to a secure network. The applied architecture was robust without having to resort to specific technical solutions. The methodology used allowed to analyse the operation for banking groups and large and small banks. The test also allowed for an initial analysis of the response time process. The test was completely successful.”
The push towards full-scale implementation comes as Spunta successfully cleared “200 million transactions per year. By far the largest project on the blockchain infrastructure if you don’t mention the largest cryptocurrencies.” The new system will provide banks with complete visibility of own and counterparty movements, daily instead of monthly reconciliations and improved communication with counterparties.
Demetrio adds, “this Spunta project is a great move forward for our country.” But more importantly “I think the most fun part is that when you find the right people to work together, you can create fantastic stuff.”