UniCredit Bank releases white paper exploring blockchain applications in banking

UniCredit has published a white paper exploring use cases for how banks can provide blockchain-based services in interbank payments and post-trade processes.

The white paper first introduces an overview of digital currency and its underlying technology, noting that it "has the potential to reshape the current financial services technology infrastructure."

One potential application mentioned in the white paper is that the technology can be used for interbank payments, with participating banks acting as verification nodes in this blockchain network.

“By adopting this solution, there is no need for reconciliation tables between different databases, as the authority of this ledger is obtained through consensus. In addition, interbank settlements do not need to go through an intermediary, which basically eliminates intermediary fees. Bank operations are executed in almost real time and in a peer-to-peer network, which reduces counterparty risk and shortens settlement time to seconds.”

Another possible application focuses on the post-trading life cycle of securities - an area that a growing number of financial organizations and market observers believe could be the first application of blockchain in the future.

“One possibility to streamline existing processes is to represent securities and perform the post-trade lifecycle on a blockchain. Clearing and settlement are performed on the blockchain, which also acts as a custodian of the assets.”

UniCredit envisions that in this case, order matching will be done off-chain, with the clearing house only having to perform functions such as updating, splitting orders, etc. This will help reduce administrative tasks and subsequent paper loading.

“Executing contract terms through code reduces the workload on back-office systems and reduces the risk of system errors.”

Finally, the white paper concluded:

“Although this solution is complex and requires a large number of participants to coordinate with each other, this technological solution still provides the greatest benefit in reducing transaction cycle time.”

Original article: http://www.coindesk.com/unicredit-white-paper-explores-blockchain-uses-for-bank-payments-post-trade-processes/
By Stan Higgins
Translator: printemps
Editor: printemps
Source (translation): Babbitt Information (http://www.8btc.com/unicredit-white-paper)