Blockchain / Distributed Ledger

JPMorgan’s Blockchain Test Project Begins

blockchain innovation

JPMorgan Chase has officially kicked off its blockchain test project, according to Financial Times.

This step forward by a major bank is part of the financial services industry 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,” Daniel Pinto, head of JPMorgan’s investment bank, 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.'”

Loans are a particularly attractive sector of the banking business to explore with blockchain’s tech, Pinto noted, because “the settlement process is complex with lots of manual intervention and multiple parties.”

Pinto, Financial Times noted, has been referenced as a possible leading candidate to take over Jamie Dimon’s role if he should leave at any time in the near future. And so far Pinto said he’s pleased with the bank’s involvement.

“Blockchain will be big in everything related to settlement, and not just loans. While it is still early days, the technology looks very good,” he told Financial Times.

In January, it was announced that Digital Asset Holdings had secured $50 million in funding in its latest round. All in, the round captured some level of investment from 13 firms that run the gamut when it comes to finance functions. Those involved, in addition to JPMorgan Chase, were: ABN Amro, BNP Paribas and PNC Financial Services Group; exchange operator fund CME Ventures; tech firms Accenture and Broadridge; and ICAP and Depository Trust & Clearing Corporation (DTCC).

“Distributed ledger technology has the potential to transform the way our industry does business, and we believe Digital Asset has the right talent and technology to make it a reality,” said Sanoke Viswanathan, chief administrative officer of JPMorgan’s corporate and investment bank and new Digital Asset board member.

Last month 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.

Of course, there are still plenty of skeptics who think it’s too early to bet on blockchain for revolutionizing the financial system, since there are still concerns about the volatility of bitcoin and anything attached to it.



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