JPMorgan Chase Advances Blockchain Tech To Reduce Glitches In Global Money Transfers
JPMorgan Chase develops its blockchain technology to minimize the number of cross-border money transfers that get rejected because of glitch.
The effort to encompass settlement features is viewed as the investment banking giant’s effort to shrug off contest from tech startups like TransferWise and Ripple.
The US financial giant introduces new characteristics to its blockchain-powered Interbank Information Network (IIN), currently used by over 220 banks across the world. IIN was established in 2017 in collaboration with Australia’s ANZ bank and Royal Bank of Canada.
The organization was established to swiftly resolve payments that contain mistakes or stuck up for regulatory purposes–issues that may need weeks to fix with various banks throughout the payment chain. Moreover, the technology was originally developed to assist organizations share disbursement info in real time — reducing handling delays.
John Hunter, JPM’s global clearing head, said he’s developed a new function that can instantaneously check how well a payment is moving to an appropriate bank account. Currently, money transfers can get turned down days after they’ve been sent due to errors in sort codes, bank account numbers and addresses. Hunter said the IIN is rapidly growing and the financial institution “looks at the settlement point to do more.”
He further said
“Banks straight through processing rates are in the mid-80s to mid-90s. It’s that gap — the 5 to 20 percent of payments — that have to be assessed by operations where we’re trying to alleviate some of that pain.”
JPMorgan has now incorporated a functionality to enable real-time authentication that a transfer is done to a legitimate account. Presently, a mistake in the account number, sort code, or any other information of the beneficiary may lead to a decline in the payment being shunned days after the initiation of transfer. The unique functionality will go live by Q3 2019, and although the IIN is presently offered for free, memberships may be brought over time. It allows national and cross-border payments.
In this problem, payment handling by banks is still “in the mid-80s to mid-90s,” as per Hunter. The “5-20 percent of payments” that gets rejected due to glitch or regulatory issues is “where we try to alleviate some of that pain,” he said. The Interbank Information Network was developed on Quorum, the bank’s 2016 ethereum-based blockchain network. That system is also the core tech for the much-reported cryptocurrency, JPM Coin, which was made available to the public in February in 2018.
JPMorgan is establishing a trial sandbox–just said to unveil in Q3–permitting fintech companies to use the IIN and finally build and introduce applications based on its functionalities. JPM also attempts to entice fintech businesses to its network by encouraging them to build apps in a custom built sandbox where they would gain link to data modeling, file transfers and safe messaging. Hunter told that this might eliminate many startup barriers, adding: “Developers need only bring their intellect.”
JPM introduced IIN as a test project in 2017. Specifically, financial institution specialists hope the technology will offer advantage to banks and financial networks. CEO Jamie Dimon suggested later that the coin could evolve for consumer use.
CEO Jamie Dimon proposed later that the coin could adapt for customer usage. Some crypto executives rejected the JPM Coin, with Ripple CEO Brad Garlinghouse arguing that it “misses the point” of cryptocurrency entirely.