Back in March 2020, the Italian Banking Association announced that it was planning to deploy blockchain technology to run reconciliations. The first use of such blockchain technologies in novel ways was likely to integrate Distributed ledger technology in the holistic interbank processes in order to bring about accelerated settlements. The strategic move in March by the Banking association was a part of the Spunta Project which was apparently managed by the ABI Lab. The Lab is the research and innovation arm of the association and its efforts are always guided towards bringing efficiency and transparency in the communication process.
The test rounds began earlier in February and about 18 banks had participated in the rounds. They represented 78% of the Italian banking sector in terms of the number of employees which is sizable for near-accurate tests. But ever since March Italian banks have joined the Spunta Network on an intermittent basis. Counting from March there have been 32 banks by the end of that month followed by the addition of 23 in May and 42 right here in the month of October till now. The Association itself comprises 700 banking institutions.
As per the latest announcement of ABI, since March about 204 million transactions have already been processed on the Spunta infrastructure. The Association believes that these numbers are encouraging and by the end of the year the numbers can exceed 350 million. Thanks to the inherent design and abilities of blockchain, it has helped speed up the complicated process of interbank reconciliation in which banks have to agree on how much money one bank owed to another. Reconciliation in the pre-blockchain days usually took weeks to complete. But, now the processing can be completed within a day because blockchain keeps a verified interbank transfer log.
Going back exactly a year ago in October, the successful completion of the first trial round took place. The participants of the first trial round were led by Intesa Sanpaolo, Italy’s second-largest bank, and 13 others. Each bank was assigned a node with every bank uploading an actual data bank data, processing about 1,200,000 transactions through the course of the trial. Essentially this was a 10 month proof of Concept and testing phase.
The trial was successful and the results were of great assistance. The trial helped in the validation of the use of blockchain and smart contracts. Banking operations can get extremely sticky and complicated beyond a point. But, the use of blockchain and smart contracts can help the banking operations to reduce the complexity and discrepancies involved in the process as well as between banking ledgers.
The Italian House of Representatives this year in February also participated in the process of approving the bill surrounding and relating to DLT and blockchain. After being convinced they passed and approved the bill which clearly defined what it will be including the technical criteria that the smart contracts had to comply with so that they remain legal in the country.