Silvia Attanasio, head of innovation at the Italian banking association, talks to Joy Macknight about a real-life application of distributed ledger technology to drive efficiency in an interbank reconciliation process.

Silvia Attanasio

Silvia Attanasio

The Italian banking association, Associazione Bancaria Italiana (ABI), has been fostering research and innovation in Italy’s banking industry for almost two decades through ABI Lab, a consortium of 160 banks and 65 IT companies. Launched in 2002, the lab produces in-depth analysis on the main trends and topics relating to technology, organisation and innovation.

Career history: Silvia Attanasio 

  • 2019 Associazione Bancaria Italiana (ABI), head of innovation
  • 2017 ABI Lab, research manager
  • 2007 ABI Lab, senior research analyst
  • 2003 ABI Lab, junior research analyst

More recently, in May 2019, the banking association set up its own innovation unit. “This is the reason that we are a step ahead of other banking associations [in innovation] – we can leverage the analysis generated in ABI Lab,” says Silvia Attanasio, who spent 17 years at the lab before moving across to the newly created role of head of innovation at ABI.

The purpose of ABI, and its innovation unit, is to represent and promote the interests of banks and financial intermediaries. “We work for co-operation between institutions and regulatory bodies in Italy and Europe to match the banks’ needs, especially in relation to innovation. We want to have a regulatory framework that pushes, not hinders, innovation,” says Ms Attanasio.

Revamping reconciliation

Since December 2017, ABI Lab – together with 18 Italian banks, including Intesa Sanpaolo and Banca Mediolanum, plus NTT Data Italia and technology infrastructure company SIA – has been working on the Spunta Project, which uses R3’s blockchain platform, Corda, for straight-through processing of interbank reconciliations.

“Through such projects, banks can work hands-on with frontier technology and understand how it should be regulated,” says Ms Attanasio, who also promotes the Spunta Project. “When we started to phase in the blockchain topic in ABI Lab, our intent was to study and analyse distributed ledger technology [DLT]. The banks then asked us to find a use case and develop a proof of concept to determine if it could transform a real business process.”

The lab identified a back-office information reconciliation process – called spunta – to begin experimenting with. “We don’t move money, but work at book level to clear every mismatch in double-entry bookkeeping,” explains Ms Attanasio.

Spunta was considered an ideal test case because it is a niche process that does not involve customers and was previously carried out monthly, which gave the banks time to recover following any incident. “The banks felt comfortable to experiment and manage the risk. At the same time, it is a perfect process to be transformed by DLT because it is based on reciprocal accounts,” says Ms Attanasio. “And we could bring an entire banking sector forward with this new technology because it is a non-competitive area.”

Fostering collaboration

The main advantage of DLT is the transparency it provides the banks. “Before, when the owner of the spunta process was bank A, then bank B was unable to see the funds movement or the account balance. Now both banks can see the same information and have a single version of the truth,” says Ms Attanasio.

She reports that it was “quite easy” to get the first 18 banks involved because there was enthusiasm to change the process and bring DLT to life. The next step was to change the interbank agreement to involve all the Italian banks. “This process is ruled by a self-regulating agreement. ABI issued a new version in mid-2019 to move the spunta process from tapes to DLT, requiring all Italian banks to be ready by September 2020,” explains Ms Attanasio.

The first wave of 35 banks will migrate by March 1, 2020, with the second wave of 30 to 40 banks going live by May 1 and the rest of the 200 banks hitting the September 2020 deadline. While there is not too much training to be done on the technology side, the banks need to understand the main principles of blockchain. She says: “The distributed application is already developed; they just need to adapt the standard data set that they use to input and output the application.”

DLT is a technology that requires collaboration and Ms Attanasio reports multiple voting rounds to decide on matters such as the front end, functionality, automated matching algorithms, the profile of the different operators that can work on the new process and so on. “We voted many times because distributed governance is a key element of distributed technology,” she says.

Future focus

In 2020, ABI is focused on bringing the Spunta Project into production and to start working with a group of international banks. “A similar process is run with all the foreign banks, so it would be beneficial to expand and adapt the project on a European level, at least,” says Ms Attanasio.

The association is also studying developments in the digital money and cryptocurrency space. “We need to develop a single position that combines the needs of all the Italian banking sector to respond to the ongoing consultations from several authorities at the European Commission level and the Basel Committee, and to face new challenges that will arise in the coming months,” she adds.

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