Earlier this month, PYMNTS reported that JPMorgan had officially kicked off its blockchain test project. Now, a few weeks later, we know just how big that test is.
Roughly 2,200 clients, according to Daniel Pinto, head of JPMorgan’s investment bank, as cited by The Wall Street Journal.
The bank has been quietly testing the distributed ledger technology that underpins the controversial digital currency bitcoin. It has been doing so in order to determine how it can be used for faster currency clearing and settlement in a manner that also reduces the bank’s risks in the transaction.
The end goal is to see if it can start using blockchain’s tech for live transactions by the end of 2016.
This step forward by a major bank is part of the financial services industry’s move to see how blockchain’s tech could bring efficiency and cost-cutting measures to the trading industries. This move is part of the larger initiative from major banks to test where such a technology could impact the financial trading ecosystem.
JPMorgan has also teamed up with Digital Asset Holdings, the startup ran by ex-JPMorgan executive Blythe Masters. The duo is looking to see where blockchain’s tech could be implemented in relation to things like JPMorgan’s loan funding business.
“To sell a loan is a very cumbersome, time-consuming process; settlement can take weeks,” Pinto told the Financial Times. “Exploring alternatives through blockchain ‘makes all the sense in the world; it’s easier and faster operationally, and you get fewer mistakes.’”
In January it was also reported that 11 major banks were testing a system that uses blockchain to make financial trading faster and cheaper. The banks involved are part of a larger group of 42 major lenders who collaborated in 2015 to work with the company R3 on innovating blockchain in ways that can disrupt how the financial markets operate. Now, it appears, JPMorgan is officially kicking off its own involvement.
Across the financial ecosystem, banks have been exploring ways that blockchain — the decentralized ledger and technology that powers bitcoin transactions — could be used to exchange data, assets and currencies. The real benefit from what the bank’s leaders have expressed is the potential to make their operations more efficient and more transparent.