75 New Banks Join JPMorgan-led Blockchain Payments Pilot Program

  • JPMorgan-led blockchain-based payments trial recently saw 75 new banks join its pilot program. 
  • Royal Bank of Canada (RBC) and Australia's ANZ bank had already been working on the pilot with JPMorgan.
  • Banks are threatened by the emergence of more effective payment solutions developed by fintech startups.

JPMorgan, the largest financial institution in the US, had launched a pilot program for a major blockchain-based payments solution. The Royal Bank of Canada (RBC) and Australia’s ANZ bank had also joined JPMorgan’s pilot program. According to the Financial Times (FT), 75 additional banks are now also participating in the trial.

Launched in October 2017, the JPMorgan-led blockchain payments trial program aims to make transactions more cost-effective and faster to process. Referred to as the Interbank Information Network (IIN), the distributed ledger technology (DLT) based software has been developed using Quorum - JPMorgan’s proprietary permissioned network developed on the Ethereum blockchain.

Banco Santander, Société Générale Join

Société Générale, a Paris-based multinational bank with nearly $1.3 trillion in assets, and Banco Santander, the largest bank in Spain, are among the 75 new banks that have joined the IIN trial program - which aims to expedite payments between financial institutions.

Jason Goldberg, a banking analyst at JPMorgan, told the FT that traditional financial institutions are now threatened by the increasing number of new fintech startups introducing much more effective payments solutions.

Goldberg said:

Blockchain is a way to keep more of that [existing client base] in-house.

Jason Goldberg

IIN is specifically designed to address inefficiencies in the current banking system in which transactions are suspended due to errors in processing or for compliance issues. These problems usually take many days or even weeks to resolve before the transactions are finally approved.

At present, the blockchain-powered IIN pilot program will aim to process $14,500 in daily payments, however, larger amounts may be transacted later on - when more financial institutions join the trial.

JPMorgan also intends to add support for payments in other major currencies as only USD transactions can be processed at present.

Attempting To "Even The Playing Field"

Commenting on the development, Richard Chambers, a senior executive at InvestX (a blockchain investment platform) and former director at Royal Bank of Scotland’s Corporate Transactions department, said JPMorgan’s IIN is an attempt by large banks to “even the playing field.”

This, as many innovative startups such as TransferWise are now able to facilitate cross-border interbank transactions more cost-effectively.

Chambers added that banks have been exploring, or experimenting, with blockchain technology “for years” as they aim to expedite “payments, settlements, and issuance” by using the distributed ledger.

He also revealed that private equity and venture capital firms are piloting blockchain as they think it can “bring liquidity to normally illiquid markets.” However, he remarked that the “bureaucratic structures and cartel like behavior” that traditional financial institutions have will slow down adoption to “a snail’s pace whilst innovative market entrants win market share and, importantly, customer’s trust.”

Ripple’s Success as a Payment Company May Not Benefit XRP, Says Pompliano

Michael LaVere
  • Morgan Creek Digital co-founder Anthony "Pomp" Pompliano is a strong supporter of Ripple as a payment protocol company. 
  • Pomp remains unconvinced whether Ripple's success will ultimately benefit XRP as an asset for investment. 

Morgan Creek Digital co-founder Anthony “Pomp” Pompliano believes that Ripple’s success as a payment protocol may not benefit XRP in the long run. 

Speaking on the latest episode of The Pomp Podcast, Pompliano outlined his reasons for being a fan of Ripple. According to Pomp, Ripple excels as a blockchain-based payment company that has managed to forge relationships with banks and financial services across the globe. 

However, Pompliano remains unconvinced of whether Ripple’s overall success will translate into benefits for XRP. 

He said,

What I don’t understand, and I think where I choose to not engage on the XRP side, is I don’t understand why people are buying it, speculating on future price movements.

Pomp explained that he saw the advantages of using XRP in the Ripple ecosystem, but was skeptical of the cryptoasset for investment. 

He said,

To me, if Ripple is successful, that doesn’t mean XRP has to be successful.

Pomp continued, saying that if you separate XRP and Ripple, the latter’s ultimate goal is to build better software for banks. He called Ripple’s mission a “no-brainer,” “venture capital bet” and admitted to being jealous of missing out on investing in Ripple’s seed round. 

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