JPMorgan expands use of Blockchain for IIN Payments
JPMorgan expands its use of blockchain technology and will use it within the banks payments system. JPMorgan has also invited fintechs to experiment on how to develop this platform.
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.
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. “This removes many challenges and hurdles — tooling, ecosystem, data, environment, etc,” said Mr Hunter. “Developers only need to bring their intellect.”
JP Morgan has recently issued its stable coin to be used for wholesale payments
