JPMorgan Chase has announced plans to expand its current financial rails blockchain project to include settlement features, with over 220 banks involved.
With increasing competition pressure from the likes of Ripple, TransferWise and Revolut, JPMorgan chase is looking to increase the reach and remit of its blockchain-based Interbank Information Network (IIN); a project set up in partnership with Australia’s ANZ bank and the Royal Bank of Canada in 2017.
IIN allows for over 220 banking members to quickly address payments that contain errors, or transactions that are held up for compliance reasons. Traditionally these problems would take weeks to solve, with multiple financial parties involved in the transaction. John Hunter (head of global clearly at JPMorgan) announced that IIN is ‘looking at the ability to do more at the point of settlement’.
Quorum and 21st Century Payments
Those who have followed the development of the cryptocurrency ecosystem will be well acquainted the outdated payment rails of the legacy financial system. Payments can take weeks, with international fees often in double digits. Hunter and JPMorgan acknowledge these inefficiencies – stating that banks’ payment processing is still ‘in the mid-80’ to the mid-90s’.
As a result, IIN is aiming to alleviate the ‘5 to 20 percent of payments’ that fail due to compliance problems and errors. Adding settlement functionality will certainly be attractive for those banks already part of the network – and aid in rebuffing the challenge of financial blockchain upstarts. The Financial Times reports that this settlement system will be live by Q3 in 2019, and allow for both domestic and international payments.
IIN is possible as a result of Quorum, an Ethereum-based blockchain project revealed in 2016, and will also form the backbone of its digital currency – the JPM coin. Interestingly, JPMorgan is reportedly developing a testing sandbox (also launching Q3) which will allow for fintech startups to use the network; developing and launching applications based on its features.
It’s safe to say that cryptocurrency startups have received a clear reply from the incumbents – and they’re not going anywhere.