Investment banking giant JPMorgan Chase is planning to expand an existing blockchain project to include settlement features as it seeks to fend off competition from payments upstarts such as TransferWise and Ripple.
The blockchain-based Interbank Information Network (IIN), set up in partnership with Australia’s ANZ bank and the Royal Bank of Canada back in 2017, currently allows its over 220 banking members to quickly address payments that contain errors or get held up for compliance reasons – problems that can takes weeks to solve with multiple banks being involved across the payments chain.
The Financial Times reports Monday that John Hunter, head of global clearing at JPMorgan, said the IIN is fast developing and that the bank is “looking at the ability to do more at the point of settlement.”
JPMorgan, he said, has now built in a feature that would allow for real-time verification that a transaction is being sent to a valid account. Currently, an error in the recipient’s account number, sort code, or other detail, can result in the payment being rejected days after it was sent.
On that issue, banks’ payment processing is still “in the mid-80s to the mid-90s,” according to Hunter. The “5 to 20 per cent of payments” that fail because of an error or compliance problems is “where we’re trying to alleviate some of that pain,” he said.
The FT said that the settlement system will be live in by Q3 2019, and will allow both domestic and international payments.
The Interbank Information Network has been built on Quorum, the ethereum-based blockchain network revealed by the bank in 2016. That platform is also the underlying technology for the banks much reported digital currency, JPM Coin, details of which were made public in February of this year.
The FT also reports Monday that JPmorgan is setting up a testing sandbox – also said to be launching in Q3 – allowing fintech startups to use the IIN and ultimately develop and launch applications based on its features.
JPMorgan image via Shutterstock