JPMorgan Chase is to widen the use of the industry’s leading blockchain technology to help smooth the banking industry’s payment system while also inviting fintechs to experiment on how to develop the platform, according to Financial Times.
The expansion of the Interbank Information Network (IIN), which enables banks to share information on a mutually accessible ledger, comes after 75 of the world’s biggest banks joined the venture last year. The platform already allows banks to quickly resolve compliance issues that can delay payments by weeks.
They also hope that by making the global payments rails run more easily they will be able to better defend their cross-border-payments business from the rise of digital payments providers such as TransferWise, Revolut and Ripple.
The banking industry generally has cooled on the potential of blockchain technology to revolutionise the industry, but JPMorgan’s head of global clearing, John Hunter, said development of the IIN continued apace with plans to expand its functions.
More than 220 banks have now signed up to the original service of allowing data sharing on payments over network so that errors can be resolved quickly. “The initial use case was around sanctions screening,” he said. “Now we’re looking at the ability to do more at the point of settlement.”
Mr Hunter said JPMorgan has developed a function that would verify in real time that a payment was going into a valid account, removing the potential of it being rejected days later because of an error in an account number, sort code, address or other aspect of the transaction.
“Banks straight through processing rates are in the mid-80s to the mid-90s. It’s that gap — the 5 to 20 per cent of payments — that have to be assessed by operations where we’re trying to alleviate some of that pain,” he said.
The system will be live in by the third quarter, for both domestic and international payments, though JPMorgan expects it to be more useful for international payments, where error rates are higher.
The IIN is also setting up a sandbox for fintechs to use the network to “develop and put out applications”. The testing environment, which JPMorgan expects to launch in the third quarter, will offer developers building blocks such as secure messaging, document file transfer and data modelling.
The IIN’s services are currently free, but it may eventually offer both paid for and commercial applications, with banks picking and choosing what they use.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
