Italian Surety bond reconcilation gets a blockchain facelift
The Italian surety bond reconciliation process is one which was ripe for disruption, for the dual reasons that surety bonds, which are used to guarantee contracts for services provided by sub-contractors e.g. for waste disposal, are seeing increased usage in international contracts; and because the reconciliation process historically occurs on bilateral registers, in a complex tightly regulated procedure that can yield major efficiency gains from utilising distributed ledger technology.
ABI Lab, the banking research and innovation center promoted by the Italian Banking Association (ABI), has collaborated with technical partners NTT Data, Sia, and R3’s Corda platform, on its Spunta project, which aims to implement the blockchain in interbank processes. The new process is being trialled in the municipality of Bari, and Mayor of Bari, Antonio Decaro, expressed his belief that,
“The project we have undertaken in collaboration with SIA will allow us to implement policies on the development of new technologies with significant progress in digitization and in the belief that, by increasing our experience in the use of DLT, we can support the work of PA bodies while triggering unprecedented technical and employment scenarios. We want this initiative to develop and generate value, both in the public and private sectors, and drive other public administration bodies to start up similar projects.”
The Spunta platform aims to reduce corruption and inefficiency by providing a transparent and auditable peer-to-peer counterparty matching service. In pre-production trials it drew on a sample of 18 banks, representing 78% of the Italian banking sector in terms of number of employees.
The group said in a statement,
“The objective is to provide data transparency and visibility, faster transaction execution and the possibility of performing checks and exchanges directly within the application.”
As such, its core features will include: the management of intra-group reconciliations, the creation of reliable reports for auditors, and the further refinement of the matching algorithm.
The blockchain infrastructure is being managed by SIA, that also recently signed a contract to manage the modernisation of Canada’s inter-bank payments system; whose total daily capital flow stands at approximately $50 trillion or $200billion.
Payments Canada’s remit encompasses a wide range of payments made by Canadians and businesses involving interbank transactions, including those made with debit cards, pre-authorized debits, direct deposits, bill payments, wire payments and cheques.
SIA is one of the market leaders in providing blockchain and DLT scalability. In 2017, SIA oversaw 13.1 billion clearing transactions, 6.1 billion card transactions, 3.3 billion payments, 56.2 billion financial transactions and carried 784 terabytes of data on the network; its clients number central banks, financial institutions as well as corporates.
