American multinational investment bank JP Morgan Chase is aiming to capture the payments industry using blockchain technology by expanding its Interbank Information Network (IIN), according to a Financial Times report.
The Wall Street giant has partnered with more than 200 banks to share their financial data on the shared ledger, the April 21 report detailed.
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In October 2017, JP Morgan partnered with Australia-based ANZ bank and the Royal Bank of Canada to introduce INN, building a blockchain-based platform for interbank payment transfers. The platform is built on an Ethereum-based private blockchain called Quorum, which was co-developed by the bank itself.
By expanding this platform, the institutional bank is threatening the dominance of other players in the payment transfer industry including Ripple, TransferWise, and Revolut.
Explaining the platform, John Hunter, the bank’s head of global clearing, told Financial Times: “The initial use case was around sanctions screening. Now we’re looking at the ability to do more at the point of settlement.”
Hunter also revealed that the bank has developed a feature which will ensure that a transaction has been made into a valid account in real time. This will resolve the issue of payment rejection even after days due to an error in the recipient’s account number, sort code, or other details.
“Banks straight-through processing rates are in the mid-80s to the mid-90s. It’s that gap — the 5 to 20 percent of payments — that have to be assessed by operations where we’re trying to alleviate some of that pain,” he added.
Earlier this year, reports surfaced that the bank is developing its native digital currency to increase its settlement efficiency. The structure of the coin, however, received some criticisms from the crypto community as the bank is planning to restrict the use of the coin to its major institutional clients.
JP Morgan has also become the largest blockchain employer in the financial services sector over the past 12 months, Finance Magnates reported last month.