SIA, the leading European hi-tech company in the payment services and infrastructures sector, and Quant Network, a UK-based pioneering technology company, have signed a partnership agreement to explore blockchain interoperability and the creation of agnostic cross-platform applications and services for banks and financial institutions. Before discussing the partnership in more detail, first let’s have a look at SIA for those not familiar.
SIA is European leader in the design, creation and management of technology infrastructures and services for Financial Institutions, Central Banks, Corporates and the Public Sector, in the areas of payments, cards, network services and capital markets. SIA Group provides its services in over 50 countries, and also operates through its subsidiaries in Austria, Croatia, Czech Republic, Germany, Greece, Romania, Serbia, Slovakia, Hungary and South Africa. The company also has branches in Belgium and the Netherlands, and representation offices in the UK and Poland.
- In 2018, SIA managed 14 billion institutional services transactions, 7.2 billion card transactions, 3 billion payments, 51.7 billion financial transactions and carried 1,204 terabytes of data on the network.
- SIA supported the launch of the new Samsung Pay payment system, and also Alipay and WeChat Pay payment service were activated. Furthermore, the offering of terminals has been enriched with the Android-based smartPOS line, making value-added services available to consumers and merchants.
- In 2018, SIA confirmed its role as key technology partner to the London Stock Exchange Group and at the end of 2018, 44 trading venues operating in Europe and the United States were connected to SIA’s “Financial Ring” which enables financial intermediaries to access, via a single high-speed, low-latency network infrastructure, the main international stock markets using date centers in Milan, Rome, London, Frankfurt, and New York.
An Alternative to SWIFT
The Eurosystem (compromises of the European Central Bank (ECB) and 19 National Central banks that are using the Euro such as the central banks of Italy, Germany, France, Spain, Netherlands, Belgium, Ireland etc.) operates the financial market infrastructure for the settlement of payments (TARGET2), TARGET Instant Payment Settlement (TIPS) and securities (TARGET2-Securities, or T2S). These platforms form the backbone of the European financial market.
All European Financial institutions will connect to these services only via the Eurosystem Single Market Infrastructure Gateway (ESMIG). The single connectivity gateway to all Target services would provide a simpler and more efficient means to access the key market infrastructures as part of the Eurosystem’s “2020 Vision” strategic plan for the evolution of market infrastructures.
SIA, in partnership with Colt Technology Services, (who were acquired by Fidelity Investments — One of the largest asset managers in the world with $2.46 trillion), has won a 10 year tender commissioned by the European Central Bank for the provisioning of connectivity services allowing European central and commercial banks, central depositories, automated clearing houses and other payment service providers to connect directly to Eurosystem market infrastructures through a single access interface (Eurosystem Single Market Infrastructure Gateway — ESMIG).
“We’re particularly proud to have been chosen, in partnership with Colt, as one of the two Network Service Providers for Eurosystem market infrastructures. It represents a prestigious result for technology ‘Made in Italy’ and confirms SIA’s significant ability to compete at international level, also strengthening our role as an innovative partner of central and commercial banks. This award for ESMIG is very important because, for the first time in Europe, all financial institutions have the chance to select the best technological solution in a framework of free competition with considerable benefits in terms of costs and efficiency, and contributes to strengthening cybersecurity and the resilience of strategically important systems”, commented Nicola Cordone, SIA’s Chief Executive Officer.
Paula Cogan, VP of Enterprise and Capital Markets at Colt, comments: “The awarding of the ESMIG tender, seven years after the establishment of the partnership between Colt and SIA, represents a really important milestone for both companies. We are pleased to underpin the infrastructure evolution envisaged by the “Vision 2020” program by providing connectivity and messaging solutions for the fully managed T2S platform. Colt’s network offers high levels of performance, scalability and guaranteed service levels which is why we are the chosen provider for over 650 financial institutions globally, including 18 of the 25 largest banks, more than 50 stock exchanges and 13 European central banks”.
This is hugely significant. Every European Financial institution will either connect via SIA, in partnership with Colt or via SWIFT (and in many cases they will have connectivity with both) in order to access the Eurosystem Single Market Infrastructure Gateway, granting access to all RTGS, Securities and Instant Payment transactions for Europe.
SIA operates a private closed network and Overledger is being integrated into their private network via SIAChain to enable Blockchain interoperability for every connected European Financial Institution immediately, and all they need to do to start using Overledger is add 3 lines of code.
SIAChain is not a blockchain itself. It is a private infrastructure covering Europe consisting of 570 supernodes within SIAnet. SIAChain was created by SIA to develop, in a secure and protected manner, innovative Blockchain applications based on Distributed Ledger Technology.
SIAchain makes a series of business applications available to communities of registered, approved members (be they financial institutions, corporates or public administration bodies) in which transparency, confidentiality and security are guaranteed as shared rules. As part of this agreement, SIA will be making Overledger available to all of its 570 Banks / Central Banks / Trading venues to enable Blockchain Interoperability.
SIAnet is the leading Financial Network in Europe with more than 100 Tier 1 banks connected, 44 Stock Exchanges / Trading Venues, covering the entire trading process from pre-trading to post-trading.
Financial institutions don’t send transactions to each other over the public Internet. They operate in heavily regulated environments and require secure, performant private networks with 100% uptime. SIA provide a private network dedicated to Financial institutions, utilising 10 GBps high speed network with extremely low latency of 4ms across huge distances stretching over 186,000 kilometres. This provides a secure, stable network with Guaranteed SLA’s and 100% uptime to ensure transactions are received and in a timely manner, able to cope with huge volumes.
Supernodes are hardware appliances deployed on SIA customers’ premise (or, at request, hosted on SIA Private Cloud) that runs different blockchain nodes such as Corda, Hyperledger and permissioned versions of Ethereum in parallel, with multiple dApps, allowing each customer to join or create Business Networks, each one solving a particular use case. There are currently around 570 supernodes deployed each representing a SIA Customer — Banks, Central Banks, Stock Exchanges etc.
SIA’s main value is the ability to verify that all Supernodes run the same version of software for both DLT clients and subscribed dApps. Moreover, SIA certifies every single dApp / MAPP provided by Communities and deployed on the platform to minimize security and interoperability issues and operates auxiliary services needed by some DLT (Notaries, Orderers, Oracles, etc.)
The partnership aims to integrate Quant Network’s blockchain operating system Overledger into the SIAchain infrastructure to enable interoperability, one of the biggest challenges and unmet needs faced by the financial industry to develop and implement blockchain and Distributed Ledger Technology based applications spanning different technologies.
“Since the European launch of our private infrastructure SIAchain, we are at the forefront of innovation in blockchain technology with the aim of supporting financial markets with a high-performance and secure architecture and a clear governance model. We actively continue on our path of innovation and the achievement of a fully interoperable blockchain network is the foremost objective we want to reach with the collaboration of Quant Network and its disruptive vision on DLT”, says Daniele Savarè, Innovation & Business Solutions Director, SIA.
Banks need blockchain Interoperability
Towards the end of 2017 SIA announced a Partnership with R3 a banking consortium utilising their Corda platform. Members of the consortium consist of banks such as Bank of America, Barclays, BBVA, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, HSBC, ING, Intesa Sanpaolo, Mitsubishi UFJ Financial Group, Mizuho Bank, National Australia Bank, Royal Bank of Canada, Royal Bank of Scotland, Scotiabank, Société Générale, Sumitomo Mitsui Banking Corporation, Toronto-Dominion Bank, U.S. Bancorp, UBS, UniCredit and Wells Fargo
There are many other blockchains been utilised with Banks, such as JP Morgan’s Quorum which is a permissioned variant of Ethereum. JP Morgan’s Coin would require interoperability with other blockchains being used by Banks such as Corda and Hyperledger.
Others include Fnality (previously known as Utility Settlement Coin) who are building tokenized versions of five major fiat currencies in partnership with Clearmatics who are utilising a private version of Ethereum. Banks involved were UBS, Banco Santander, Bank of New York Mellon, State Street, Credit Suisse, Barclays, HSBC Holdings and Deutsche Bank AG.
As well as We.Trade consortium utilising Hyperledger Fabric and is currently in live production consisting of banks such as Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Societe Generale and UniCredit
Overledger bringing blockchain interoperability immediately to all 570 Banks / Trading partners
The really important thing to understand with this partnership is that SIA will be integrating Overledger into SIAChain. They already have built the network, deployed supernodes at all their customers sites and already have loads of banks using various blockchain applications. With this partnership they now can utilise Overledger to benefit from blockchain interoperability with just 3 lines of code and less than 8 minutes.
Companies such as Ripple, Stellar etc have to take years rolling out their infrastructure / software to individually connect each bank. By SIA Integrating Overledger into SIAChain, all 570 banks / trading partners have access to Overledger instantly. It’s also a closed private network so its not like they can just integrate other solutions unless they have been integrated into SIAChain.
The key is SIAnet and SIAChain is an existing financial infrastructure that already is used and interconnects 570 banks and financial institutions. The access and adoption is already there, all the banks are already connected and using the network. Difference is now, it has Overledger.
It would have taken us 10+ years to onboard 570 banks one by one and build the infrastructure. This is where Ripple, Stellar (IBM) are stuck and adoption will take many years to individually connect each bank. We already have all of them connected now.
SIAchain was selected for the operational testing of the “Spunta Banca” project — coordinated by ABI Lab, the research and innovation center promoted by the Italian Banking Association — based on blockchain technology that involved 18 Italian banks performing a proof of concept with excellent results. This has now progressed to technical tests with 200 banks and 200 million data items for a year before going into production.
Just a couple of days ago an update of the Agreement for the maintenance of reciprocal accounts between banks with regard to the interbank check was approved, this allows the development of the check process using Distributed ledger technology (DLT), starting from 1st March 2020. It is therefore a blockchain for banks operating in Italy.
FINSEC Project funded by Horizon 2020
FINSEC, (Integrated Framework for Predictive and Collaborative Security of Financial Infrastructures), is a flagship project which will develop, demonstrate and bring to market an integrated, intelligent, collaborative and predictive approach to the security of critical infrastructures in the financial sector. FINSEC will provide a blueprint for the next generation security systems for the critical infrastructures of the financial sector.
The FINSEC project will provide tools for stakeholders’ collaboration in the financial supply chain to leverage the results of the previous tasks, while supporting assets modelling and interrelationships for financial services involving multiple participants, such as SWIFT network interactions.
The blockchain will be established and will operate in a fully decentralized manner,i.e. it will not be under the control of any administrative entity. Nevertheless, each participating entity (e.g., a bank or another financial institution) will interface to the blockchain infrastructure through a ledger client application, which shall make use of a blockchain API enabling the execution of the chain code. The entire data sharing process will be driven by a data model: the latter will specify the subset of security information that will be shared by each blockchain participant
Game Changer for Quant Network and for Blockchain Mass Adoption by Financial Institutions
This is a game changer for Quant. SIA are integrating Overledger into the leading financial private network in Europe enabling blockchain interoperability to all of its 570 Banks, Central Banks, Stock Exchanges, Trading venues etc immediately. Not having to spend years rolling our infrastructure / software, they can all benefit today.
This number will only increase with the recent news that SIA, in partnership with Colt Technology Services, has won a 10 year tender commissioned by the European Central Bank for the provisioning of connectivity services allowing European central and commercial banks, central depositories, automated clearing houses and other payment service providers to connect directly to Eurosystem market infrastructures through a single access interface (Eurosystem Single Market Infrastructure Gateway — ESMIG).