Italy’s ABI Lab is building a blockchain proof of concept (PoC) to simplify and standardise domestic interbank reconciliation on R3’s Corda platform.

ABI Lab, a banking research and innovation centre run by ABI for over 160 banks and 65 information communication technology companies in Italy, will leverage Corda’s distributed ledger technology (DLT) to address outdated and time consuming reconciliation practices and the challenges associated with managing bilateral data sources.

The centre will explore the applicability of DLT to issues such as the time taken to identify mismatched transactions between two banks, lack of a standardised process and communication protocol, and limited visibility of transactions between parties. These often result in discrepancies that are costly and complex to resolve. Corda uses DLT to provide a single, immutable record of each transaction, optimizing and simplifying the management of discrepancies occurring.

Pierfrancesco Gaggi, president of ABI Lab, commented: “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.”

David Rutter, CEO of R3, added: “The manual processes and systems used for interbank reconciliation are time-consuming, costly, labour-intensive and error-prone. Working with ABI Lab we are using Corda to automate the matching process, helping 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.”

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