SIA, a major Italian payment company and a subsidiary of CDP Equity, has collaborated with fintech firm Wizkey to offer blockchain-based credit trading.
Blockchain Technology for Credit Trading
According to a press release on Tuesday (Jan. 26, 2021), SIA announced the launch of a new initiative in partnership with Wizkey that would enable financial institutions such as banks, financial operators, and funds, to trade credits, including non-performing loans (NPL) using blockchain technology.
Part of the features of the new credit trading platform will see every credit portfolio with its permanent data room, with the use of blockchain technology ensuring that data and history are authentic, while preventing asymmetry risks.
Digitized credit on the SIA platform will be traded through public and private auctions via smart contract protocols. The infrastructure will also record all relevant trading history for each credit portfolio.
The European Banking Authority (EBA) in its data noted that the total nominal value of loans under moratorium was €871 billion as of June 2020. France accounts for the largest of this sum at €250 billion, followed by Spain at €187 billion, and Italy coming third at €156 billion.
The new platform by SIA and Wizkey would be managed using SIA’s technology infrastructure. Also, the utilization of distributed ledger technology (DLT), would bring efficiency, liquidity, and transparency to the secondary trading market.
Commenting on the new initiative, Daniele Savarè, SIA’s Director of Innovation & Business Solutions, said:
“The main objective of this project launched together with Wizkey is to support banks in managing credits, especially non-performing ones, in a standardized and secure manner in line with the indications of European regulators.”
Various financial institutions continue to employ blockchain technology for different purposes such as credits and bonds, to improve the finance sector. As reported by earlier in January, Vietnamese bank HDBank became the first bank in the country to issue a letter of credit (LoC) via DLT.
HSBC Bangladesh also issued its LoC using blockchain technology, which helped to reduce the waiting time to 24 hours. Other financial institutions such as Standard Chartered and South Africa’s Standard Bank have also utilized DLT for the same purpose.
As also reported back in August 2020 that Italy’s largest mutual insurance firm Reale Mutua issued a blockchain-based surety bond.