Banking on blockchain: The innovations that have emerged from financial firms

Are banks quietly joining in on the blockchain revolution? We take a look into some of the patented projects using blockchain submitted by major banking institutions.

Banking and digital currencies rarely see eye-to-eye owing to the fundamental concept of money on the blockchain which sets out to debank finance. Despite this, several major banks across the globe have taken the innovation of blockchain into their ranks and have either patented or produced new methods and means of using the technology to offer their customers novel features.

In this, we will be exploring innovations using blockchain technology that have emerged from five major banking institutions.

JPMorgan & Chase

This massive American banking institution has expressed interest in using blockchain on multiple occasions and has applied for patents for innovations more than once. In this, we look at the two patent applications and the ideas revolving around them.

In May of this year, the US Securities and Exchange Commissions (SEC) released the application that the bank had submitted in October. In this patent, JPMorgan was hoping to patent a system which would be using blockchain technology to record transactions and store data in a unique way. 

The company gave a summary of the patent, as outlined in the application:

“In one embodiment, a method for processing network payments using a distributed ledger may include: (1) a payment originator initiating a payment instruction to a payment beneficiary; (2) a payment originator bank posting and committing the payment instruction to a distributed ledger on a peer-to-peer network; (3) the payment beneficiary bank posting and committing the payment instruction to the distributed ledger on a peer-to-peer network; and (4) the payment originator bank validating and processing the payment through a payment originator bank internal system and debiting an originator account.”

JPMorgan expressed at the time that using distributed ledger would be beneficial because it “provides a practically immutable, verifiably true audit trail”. They also said that this system could possibly cover a number of features including “a payment originator bank; a payment beneficiary bank; a peer-to-peer payment network, wherein the payment originator bank and the payment beneficiary bank are participant members of the peer-to-peer payments network; and a distributed ledger.”

A few months later in July, the U.S. Patent & Trademark Office (USPTO) released another patent application from JPMorgan. The form showed that the company is exploring a system using blockchain which would be able to tokenize and trade assets on digital store receipts – thus introducing a security token.

As in the patent application:

“Virtual Receipts,” are asset or obligation-backed electronic tokens that may provide investors, brokers, custodians, and clearing firms with a means to link an underlying asset or obligation with its digital representation on a distributed system for the purposes of ownership tracking and transfer; transaction clearing and settlement; asset origination, distribution and securitization; and other such marketplace processes that may be facilitated on a distributed system. As used herein, a distributed system includes a distributed ledger, such as a Blockchain or Ethereum-based ledger.”

Since virtual depository receipts, in this case, would be categorized as security tokens they would, therefore, be strictly regulated by the SEC.

National Bank of Dubai

In March, one of the largest banking groups in the United Arab Emirates looked to blockchain technology as a means to fight fraud.

In order to achieve this, the National Bank developed a system which uses a unique QR code which is put on a check and each check then recorded on a blockchain.

At the time Abdulla Qassem, the bank’s CEO, said that “Emirates NBD is committed to exploring commercial uses for this innovative technology. After a successful pilot phase, [they] are pleased to roll out Cheque Chain to our customers nationwide, becoming the first bank in the region to offer this service.”

Bank of America