Chris Middleton reports on how the US’ biggest bank is expanding its blockchain network with over 200 other institutions onboard.
America’s largest bank by assets, JPMorgan Chase, is to expand its use of the Interbank Information Network (IIN), the world’s largest blockchain banking platform, according to a report in the FT. It also aims to encourage FinTech startups to experiment with the technology and help develop the system.
The IIN was founded by JPMorgan Chase, the world’s sixth largest bank, last summer, and trialled in partnership with ANZ and the Royal Bank of Canada. Seventy-two of the world’s leading banks came onboard in September 2018.
Since then, the network has more than doubled in size: currently, 210 banks are listed as IIN members across four regions: the Americas, Europe, Asia-Pacific, and Central and Eastern Europe, the Middle East, and Africa.
The IIN runs on Quorum, a permissioned variant of the Ethereum blockchain, also developed by JPMorgan. The aim is to create a shared ledger to speed up cross-border transactions and minimise friction, addressing some longstanding challenges in interbank information-sharing.
In particular, the IIN seeks to help banks resolve compliance issues that can delay cross-border banking, speeding up transactions that have been delayed by errors or missing data. As a result, the more banks join the blockchain, the larger the pool of data that can be shared and logged on the distributed ledger.
The big-picture context is traditional banks’ aim to keep as much of the digital payments market in house as possible, as challengers, non-bank payment platforms, and apps proliferate in a world that is becoming increasingly mobile, social, and targeted by startups and technology giants alike.
According to JPMorgan Chase’s Head of Global Clearing, John Hunter, the bank is now looking to expand the capabilities of the platform to “do more at the point of settlement”.
He told the FT that JPMorgan has developed a new function – due to go live in Q3 this year – that would verify in real time that a payment was going into a valid account, removing the potential of it being rejected later because of missing data.
The IIN is also setting up a sandbox environment for FinTechs to develop, publish, and test applications, said the bank. This is also due to go live in Q3.
- Earlier this month, JPMorgan Chase reported the highest ever Q1 profit for a US bank: $9.1 billion – up five percent year on year, boosted by higher interest rates and new branch openings.
However, the bank’s corporate and investment division saw profits fall by 18 percent year on year, underlining the tougher regulatory and trading environment for i-banks.
- IBM is one of a number of technology companies working with the traditional banking sector on blockchain initiatives, via its Blockchain World Wire payments network. This is designed to enable cross-border transactions via an intermediary digital token between fiat currencies. The BWW came out of beta testing last September.
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