JPMorgan Chase, a multinational finance service provider, recently published a patent for a blockchain system that will help facilitate transactions between banking institutions. The application seeks to create a license blockchain-based system which will utilize peer-to-peer networks to enable the recording of data (payments) involving bank-to-bank transactions. This patent was titled “Systems And Methods For The Application Of Distributed Ledgers For Network Payments As Financial Exchange Settlement And Reconciliation.” JPMorgan had filed for it back in October 2017; however, it was published on May 3rd, 2018.
The multinational investment bank has admitted that the conventional method used to move money across the globe is inefficient, slow, and too complicated. It believes that its patent will eventually help mitigate these problems by leveraging blockchain technology to create a system that is faster, secure, and much more efficient than the one in place today.
The inadequacies of the current system with regards to cross-border payment were well articulated in JPMorgan blockchain patent:
“For a cross-border payment to be made from a payment organization to a payment beneficiary, a number of messages must be sent between the banks and clearing houses involved in processing the transaction. This often results in a slow transaction, as there may be delays in service due to correspondent banking, messaging networks, and clearing intermediaries in the payment flow.”
Thanks to this patent, the conglomerate has identified a variety of methods it can employ to direct payments on the blockchain network. According to the company, using blockchain to achieve this is feasible because it “provides a practically immutable, verifiably true audit trail.”
This patent is one of JPMorgan’s many footprints in the blockchain tech world. The company has its own custom blockchain project called Quorum, which was developed to make its transactions smoother and more secure. JPMorgan blockchain platform handles the company’s settlement of derivatives and improves their cross-border payment operations.
The company aimed to make Quorum become “the standard of Wall Street.” However, their efforts have received mixed feedback from the industry as some financial institutions had concerns that making Quorum the industry standard would provide JPMorgan with an unfair competitive advantage; due to these concerns, Quorum has not been readily adopted by other banks. This led the company to go in a different direction. There are now plans to spin off Quorum as a stand-alone entity.
JPMorgan blockchain technology was in the news again in April. The company teamed up with the National Bank of Canada as well as other notable financial institutions to test debt issuance on its Quorum blockchain. Goldman Sachs and Pfizer were among some of the big names that participated in this experiment, and it goes to show just how much blockchain enthusiasm is growing in the financial sector.
The merits of deploying blockchain technology in the financial sector and the growing positive sentiment towards the technology were also echoed by the Managing Director at Goldman Sachs Asset Management, David Fishman:
“We’re excited to have the opportunity to learn from this test and to help develop more efficient ways of trading – from providing more transparency, to streamlining processes and minimizing transaction costs.”
JPMorgan is one of the biggest banks in America and it continues to embrace and invest in the distributed ledger technology, this has created a wave of enthusiasm in the blockchain community and has blockchain evangelists very optimistic about the future of this emerging technology.