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JPMorgan Chase will expand the use of industry-leading blockchain technology to help smooth the bank's payment system while inviting fintechs to experiment with platform development.
The expansion of the Interbank Information Network (IIN), which allows banks to share information on a mutually accessible major ledger, comes after 75 of the world's largest banks joined this initiative last year.
The platform is already allowing banks to quickly resolve compliance issues that could delay payments by weeks.
They also hope that by facilitating the operation of the global payment rails, they will be able to better defend their cross-border payments business against the rise of digital payment providers such as TransferWise, Revolut and Ripple.
The banking sector has generally held back the potential of blockchain technology to revolutionize the industry, but JPMorgan Global Compensation Leader John Hunter said the development of the IIN was proceeding at a sustained pace in the world. purpose of developing its functions.
More than 220 banks have now joined the original service of sharing payment data over the network so that errors can be resolved quickly. "The initial use case was the filtering of sanctions," he said. "We are now looking into the possibility of doing more at the time of settlement."
Mr. Hunter stated that JPMorgan had developed a function to check in real time that a payment was being made to a valid account, eliminating the risk that it would be rejected several days later due to An error in an account number, a sort code, an address or another transaction.
"The banks' direct processing rates range from the mid-1980s to the mid-1990s. It's this gap – the 5-20% of payments – that needs to be assessed by the operations for which we're trying to mitigate some of that. pain, "he said.
The system will be operational in the third quarter, for domestic and international payments, although JPMorgan expects it to be more useful for international payments, where error rates are higher.
IIN is also in the process of setting up a sandbox to allow fintechs to use the network to "develop and develop applications". The test environment, which JPMorgan plans to launch in the third quarter, will provide developers with basics such as secure messaging, document file transfer, and data modeling.
"It eliminates many challenges and obstacles – tooling, ecosystem, data, environment, etc.," said Hunter. "Developers only need to bring their intelligence."
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IIN services are currently free, but it may offer both paid and commercial applications, with banks choosing and choosing what they use.
"Banks are replicating the same infrastructure over and over again," Hunter said. "There is no reason that banks do not deploy a utility-type service with the network."
Emma Loftus, head of global payments and receivables at JPMorgan Treasury Services, said the long-term ownership of the network "also depends on how it will be deployed."
"It has to be an ecosystem favorable to the industry," she said.
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