Wall street financial institution JPMorgan has filed a patent for a DLT-based system for floorplan financing.
According to a patent filed by the wholesale car financing division of JPMorgan, the bank is interested in developing a distributed ledger version of floorplan lending, which will provide a revolving line of credit for car dealers to borrow against inventory.
JPMorgan has started a pilot project that uses Quorum, its permissioned Ethereum-based blockchain. This system is currently being tested with various real car dealerships.
The system uses the unique vehicle identification number (VIN) ascribed to each automobile in the U.S. as a way of checking inventory on the dealership floor. In addition to improving risk management, the bank hopes that the DLT-based system will prevent a practice known as "double flooring".
According to a report by Coindesk, Christine Moy, who is the blockchain lead at JPMorgan, stated:
This is when accidentally (or fraudulently) a dealership may pledge one vehicle as collateral for one floorplan contract to one bank, but also pledge the same collateral for another floorplan contract with another bank
Featured Image Credit: Photo via Pexels.com