Italian banks are moving from the legacy interbank reconciliation infrastructure to R3’s Corda blockchain, and as many as 85 percent of them already made the switch, Coindesk reported on Monday.
Interbank reconciliation is the process under which the banks verify their books and double-check transaction logs. This is done under the Italian Interbank Agreement passed in 1978 and was updated in May 2019 to include data standardization.
With the legacy centralized infrastructure, this reconciliation process takes between 30 to 50 days on average and was also unpredictable, but with Corda, it can be completed within a day, Silvia Attanasio, head of innovation at the Italian Banking Association, detailed.
As many as 55 Italian banks, that constitutes 85 percent of the total, have already using the blockchain platform for data transfer. The bank-specific platform has been designed by NTT Data and the bank technology company SIA is operating it.
Minimal failure risk
The trial is already in phase two, and the third and final phase is expected to start by October, and by then, the banking association is expecting the addition of more banks in the project.
Changing the Face of AML with Self Service AnalyticsGo to article >>
Attanasio also stressed the importance of the change in the reconciliation process and the technology used.
“The benefit is related to the new standardization more than the technology itself,” Attanasio told the crypto publication.
As the interbank reconciliation process is not customer-faced, there is minimal risk of banking infrastructure failure in case of any failure.
“If we failed in this process, the worst thing that could happen was to have a problem in the information exchange between banks,” he added. “Clients are not affected, the companies are not affected. It was a natural sandbox.”
Apart from adopting blockchain infrastructure, the Italian Banking Association is also ready to test digital euro in the banking environment, however, no updates on that have been made public yet.