JPMorgan, Siemens and the Lure of Blockchain (Beyond Bitcoin, of Course)

There are country-by-country rollouts — and then there are company-by-company rollouts.

News this week that banking giant J.P. Morgan Chase is working with Siemens on blockchain offerings geared toward payments signals a way to get the technology — and specifically, Onyx, J.P. Morgan’s blockchain unit — more firmly entrenched within the corporate landscape.

Read more: Siemens Launching JPMorgan-Built Blockchain

For now, the system — developed with Siemens with Onyx — is used just for moving money between Siemens’ own accounts in U.S. dollars, although there are plans to add euro transfers in 2022. The key is to help verify payments and make operations more efficient.

But the idea of setting up payment blockchains and gaining traction with larger firms trains a spotlight on how multinational companies are examining cryptocurrencies and the way blockchain might be used in the cross-border exchange of more than bitcoin and stablecoins — and indeed can be used to transfer all manner of digital assets (including information and contracts).

Finding a Wide Berth

It is in the cross-border efforts that blockchain may find its wide berth in terms of financial services.

In a PYMNTS report done in collaboration with Circle, surveys of 250 executives revealed that blockchain has strong potential in international activities.

See more: Closing the Gap Between Cross-Border Crypto Demand and Access to Services

PYMNTS’ research revealed that, despite the availability of new payment options, many financial institutions (FIs) lag behind marketplace interest in cross-border payments innovations, especially in B2B settings.

Roughly 58% of multinational firms use crypto in at least some operational processes, whether through investing or payment activities. PYMNTS found that 56% of cross-border businesses use at least one blockchain network. As the data show, they primarily use public networks, with 37% using public networks only and 15% using both public and private networks.

There are implications for using — and, for enterprises and FIs, seeking to use — blockchain, given the inefficiencies already inherent in cross-border transactions. Correspondent banking as a process means that two banks must establish reciprocal accounts with each other, country to country. That can be an onerous and costly practice that is at best opaque and at worst filled with pain points.

Onyx Global Head of Coin Systems Naveen Mallela told Karen Webster, “my conversations with most of the banks have [concluded] that the industry needs shared platforms.”

“It’s not about bank-specific products; it’s not about bank-specific platforms,” he said. “It’s about shared, industry-wide platforms and decentralized networks.”

Read more: JPMorgan’s Onyx Opens Infrastructure to Disrupt Cross-Border Payments

The focus on the tech and the platforms — and chiefly, the blockchains that underpin it all — give a launching pad for J.P. Morgan’s own JPM Coin, but extend the digital bet far beyond any one coin or digital currency. Critical mass might be reached as multinationals take note of, say, Siemens’ reach — and follow suit.