Application of Blockchain Technology in Financial Industry

by Valerio Franzoso
May. 28, 2019
3 minutes

In recent times blockchain technology has drawn attention of financial industry resulting in different initiatives and projects focused on money and property transfer, generally speaking. Thanks to the tokenisation process, different kind of properties can be transferred easier and faster, saving costs and improving security.

Blockchain technology has shown a great application potential in several sectors especially thanks to the possibility to automate the execution of contracts.

Some insurance applications, for instance, were promoted by AXA, which launched a new insurance policy based on smart contracts in order to deliver refunds in case of delay of the flight.

Governments and sovereign states as well noticed the potential of tokenisation process. In September 2018, Austria launched a Government Bond for the first time ever, notarizing and managing the activities related to it on Ethereum blockchain.

Tokenisation processes were also implemented into the energy sector. In October 2017, for instance, Enel and E.O.N. conducted a research about benefits derived by blockchain technology concerning the energy buying and selling, which resulted in a set of solutions regarding that matter.

Transfer money in the form of cryptocurrency is easier than a traditional money transfer. This concept has served as a basis for the rise of ICO phenomenon – Initial Coin Offering. It is a brand new funding model for ideas and activities focused in particular on blockchain and it enables international fundraising.

Ripple is another interesting case with respect to money transfer, especially for what concerns the speed of transactions. R3 is an enterprise blockchain software firm that developed an open-source blockchain software called Corda and created a consortium involving banks, financial institutions and enterprises from all over the world.  Corda platform runs on a private blockchain that hosts transactions from the entire financial sector, globally speaking.

Thanks to Corda platform, ABI and the Italian Banking System are working on a complex project, expected for the end of this year, that will lead to exploit the benefits from that private blockchain at their best for what concerns transactions – bank check- carried out among all the Italian Banking Institutions. In fact, the project will make the Italian Banks the first institutions in the world to massively implement blockchain-based technology solutions. On the other hand, it is important to point out that the Corda platform is a permissioned one, meaning it adopts different mechanisms when compared with permissionless blockchains. One of the greatest advantages of the permissioned blockchain is an easier way of monitoring by the Supervisory Authorities.

Another “Made in Italy” solution is named Anticipo Fattura. This project is promoted by SIA and GFT and it aims to prevent that the same invoice can be discounted by several credit institutions.

Besides, there are other different projects being developed and managed by Banking Institutions. Intesa Sanpaolo notarizes data related to financial transactions on Bitcoin blockchain. In August 2018 Banca Popolare di Sondrio launched a service that allows to record on Bitcoin blockchain the client’s express consent to renew RC Auto policy. Borsa Italiana – in collaboration with IBM – has chosen to test the blockchain technology with a project aimed to replace paper trading certificates issued by the companies. Lastly, some Italian insurance companies have decided to investigate the possible uses of this technology, both a) by structuring international system solutions, as in the case of the international consortium B3i (Blockchain Insurance Industry Initiative), in which UnipolSAI and Generali are participating, and b) by solutions regarding Italian system, as in the case promoted by ANIA in collaboration with Reply and eight other companies developing solutions related to the sector of disputes on the RC auto.

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