Italian Banks’ App Shows Financial World is Not Sleeping on Blockchain
It seems that blockchain applications are getting more common in the financial world, connecting a number of companies and solving their long-standing issues. Another proof of that is an app that will be used by Italian banks.
Associazione Bancaria Italiana (ABI), the Italian banking association, has built the Spunta Banca DLT application, which is set to connect an entire domestic banking system on blockchain, thus allowing the association to cut operational costs, reports Euromoney. The application operates as a permissioned network on R3’s Corda enterprise platform, and it enables for the discrepancies between different ledgers for nostro and vostro accounts held by Italian banks for each other to be reconciled – traditionally, a time-consuming process.
Per the article, eighteen banks tested the system in Q1 2020, and thirty-two banks are using it now, including giants like Intesa Sanpaolo, UBI, UniCredit, Banca Mediolanum, Banca Monte dei Paschi di Siena, and the Italian operations of foreign banks such as BNP Paribas and Crédit Agricole. Twenty-three more banks will join this month, and by the end of 2020, all banks in Italy are expected to join what David E. Rutter, chief executive of R3, calls "one of the most significant real-world digital transformations in the interbank financial services sector to date."
This is another proof that the financial world wasn’t sleeping on blockchain lately. Actually, in the past three years of silence which many perceived as disinterest, "the financial services industry went about the business of evaluating the underlying business value and extending beyond the experimentation phase of ‘seeing what works’," writes Robert Crozier, Head of Global Blockchain Centre of Competence at insurance giant Allianz SE.
What the financial world focused on are the specific problem patterns related to accounting and data reconciliation, affecting all companies and traditionally treated as a given. Blockchain allows them to solve those issues, and that comes with a number of major benefits. Crozier lists the reasons why addressing these problem patterns matter and how blockchain solves them:
- benefits to customers: insurers serve their customers better via blockchain, because "it shortens the time necessary to get what they need when they need it," thus reducing costly downtime for the customer, which often leads to minimized disruption to somebody’s ability to work and get paid;
- benefits to financial services institutions: blockchain enables greater efficiency and simplification, as well as collaboration within a company, between companies, and among a wide range of partners; it improves transparency, and with it the ability for information to be distributed to people who need it on the one hand, and for regulatory supervisors to ensure the stability of the financial system on the other; helps better detect claim duplication, reduce data error, and identify fraud, etc.
"As a result, leveraging blockchain can offer a significant leap forward in terms of productivity, something which financial services providers traditionally struggle to scale," Crozier concludes.
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