JPMorgan Chase & Co. is planning to expand its blockchain use for improving the payment system of the banking industry, and get FinTechs to experiment to develop the platform.
The platform allows the banking system to promptly resolve compliance problems that can postpone the payments by weeks. In 2018, more than 75 of the world’s biggest banks became the members of the IIN (Interbank Information Network) to fight off threats from the payment startups. Not only this, more than 220 banks have signed up for the first service enabling data sharing on payments over the network.
According to The Financial Times, JPMorgan’s head of global clearing, John Hunter, said –
“The initial use case was around sanctions screening. Now, we are looking at the ability to do more at the point of settlement.”
Hunter added that JPMorgan has additionally created a sort of function that can verify the payment of being transferred into a valid account in real time.
He said –
“Banks straight-through processing rates are in the mid-80s to the mid-90s. It is that gap – the 5 to 20% of payments – that have to be assessed by operations where we’re trying to alleviate some of that pain.”
The company expects that the system will be live by the Q3 of this year, with the anticipation that it will mainly be useful for international payments, which experience higher error rates. Currently, the services are free, but there is a possibility for both paid as well as commercial applications in the future.
Also, the Interbank Information Network is setting up a sandbox so that FinTech firms can use the network for developing and putting out applications. This is also anticipated to launch in the Q3 of this year; offering developers secure messaging, data modelling, document file transfer, and more.
Hunter said –
“This removes many challenges and hurdles – tooling, ecosystem, data environment, etc. Developers only need to bring their intellect.”