Seeking to ward off upstarts like TransferWise and Ripple, American investment banking giant JP Morgan is expanding its blockchain project onto the payments scene.
J.P. Morgan’s Interbank Information Network (IIN), which was originally designed to tackle compliance issues, will be expanded to “help smooth the banking industry’s payment system,” the Financial Times reports.
“The initial use case was around sanctions screening,” said John Hunter, JPMorgan’s head of global clearing, adding that the bank is currently “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.
With over 220 banks – including giants such as UBS, MUFG, and Credit Agricole – joining J.P. Morgan’s network for its original service, IIN’s expansion could be quite something. Its services are currently free, though it may offer paid applications in the future.
At any rate, the system is slated to go live by the third quarter, around the same time IIN opens a sandbox for fintechs. The testbed will offer developers ingredients such as data modeling, file transfers, and secure messaging.
“This removes many challenges and hurdles — tooling, ecosystem, data, environment, etc,” said Mr Hunter. “Developers only need to bring their intellect.”
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