Blockchain’s Corda Trialed by ABI Lab for Interbank Payments

Blockchain, Innovation | December 21, 2017 By:

ABI Lab, the Italian research and development center for banking technologies, is working on a blockchain proof-of-concept (PoC) to handle straight-through processing of interbank reconciliations using R3’s Corda platform.

ABI Lab was born in 2001 as an initiative of the Italian Banking Association (ABI). The aim was creating a network between banks and information and communications technology (ICT) companies. It also sought to research activities on innovative technologies to manage processes, channels and security in banking.

Specifically, the center research focuses on useful technologies for internal process re-engineering and for new services development.

R3’s Corda platform is a blockchain-based platform that restricts access to transaction data and can handle more complex transactions. R3 created it for the processing of securities and derivatives and for payments.

ABI Lab has partnered with NTT Data Italia to explore the applicability of distributed ledger technology (DLT) to issues such as the time taken to identify mismatched transactions between two banks; lack of a standardized process and communication protocol; and limited visibility of transactions between parties. Corda will provide a single, immutable record of each transaction, resolving the discrepancies in mismatched data that are often costly and complex to resolve.

According to ABI Lab, the success of this pilot will simplify the resolution of the suspended movements in the correspondent accounts between banks in terms of better efficiency, transparency and speed of this process.

“Starting from a simple area using DLT can be a good solution to pave the way for future implementations with a stronger knowledge on these tools generated from a sector-level project,” said ABI Lab President Pierfrancesco Gaggi.

R3 CEO David Rutter said the manual processes and systems used for interbank reconciliation are time-consuming, costly, labour-intensive and error-prone. He added that Corda will automate the matching process to help Italian banks avoid mismatches and improve efficiency and accuracy across the board.

“This PoC will demonstrate how easy it is for banks to reduce their operational and back office costs, while saving time and communicating securely by utilising DLT,” Rutter said.