JPMorgan Chase Blockchain Project is Scaling Effectively – Report
The DLT system, called Interbank Information Network, has shown its first significant results in transaction settlements, according to US media reports.
US multinational bank JPMorgan Chase has conducted successful tests of its blockchain-based payment system, dubbed Interbank Information Network (IIN). The project is now able to scale transactions effectively, Financial Times reported on Monday.
II N scaling capabilities are working very well, but JPMorgan expects the system to settle around 300,000 transactions daily when fully launched. In comparison, the international Swift payment system manages 14.5 million cross-border transactions on an average every day. However, the IIN capabilities can grow if more banks join the project, which now has more than seventy participants, JPMorgan told FT.
Commenting on those results, David Treat, head of Accenture’s capital markets blockchain practice said:
“Certainly from a size of ecosystem perspective and starting to do something in production, having [so many] banks [participate in IIN] and some of the world’s biggest banks is a big deal.”
JPMorgan Chase will focus IIN on the issues where blockchain can help banks to tackle the growing competition from fintech players like Revolut. The project will bet on speeding up the transactions, but will not expect cost savings as the JPMorgan is not sure whether the distributed ledger technology system (DLT) can be so effective in that area.
“Blockchain is frankly a great technology, however, I’m not sure that the initial hypothesis that everyone had about saving significant sums of money is where you’ll see a lot of the new products being developed,” Umar Farooq, the head of blockchain at JPMorgan said as quoted by FT.
“It will be much more about doing things that could not be done without blockchain technology, creating new products…When you look at it purely as an expense saving mechanism that limits the potential of the technology.”
IIN recent tests have shown that the blockchain can manage problematic payments or resolve various errors instantly, much better results than the existing software solutions, which handles those process for around two days, mainly due to compliance issues.
JPMorgan Chase revealed IIN in October 2017 with two participants, Royal Bank of Canada and Australia and New Zealand Banking Group Limited. A year later, the project tapped more than seventy new banks, including Santander, Société Générale, Credit Agricole, and National Bank of Canada.