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After tackling several issues related to payments, the American multinational investment Bank and financial giant JPMorgan Chase has decided to delve further into blockchain technology with another expansion of its blockchain-powered network.
This move will help the banking giant to ensure that the payment system in its banking sector is operated without any glitch. It’s also extending an invitation to FinTech companies so that they could find out a way to develop their platform further.
The Interbank Information Network (or IIN in abbreviation) was launched in 2017 by JPMorgan and is actually a peer-to-peer information network and allows various banking platforms to exchange valuable information. The IIN is used to solve or minimize troubles in various banking operations such as payment delays and information sharing. When it was first launched in 2017, 75 of the top financial institutions in the world have joined it. As more and more banks and financial institutions joined the network, quicker and more transparent the whole payment system became.
The measures are also a step to ensure that JPMorgan’s cross border payments business is not threatened by new and upcoming ventures such as TransferWise, Ripple and Revolut. Although the banking sector is still somewhat reluctant about blockchain (and of course suspicious of crypto in general) to transform its operations, JPMorgan is stubborn regarding its network to further expand its operations globally as assured by its head of global caring, Mr. John Hunter.
It is safe to say that other financial institutions are now following suit: The Financial Times reports that around 220 banks have become a part of the global network. This will ensure that there are less errors regarding the operations involving financial payments and also data sharing. Errors if any, would be resolved quickly.
The venture would also allow JPMorgan real-time verification regarding whether the payment or exchange was done through or to a valid account or not. This reduces situations where payments are eventually canceled days after on the basis of incorrect account details such as addresses, account number or even sort code.
The straight through payments percentages that are done by banks successfully lie around the mid 80’s to around 90’s. The main target is to improve the numbers through their endeavors and various operations are being done in order to asses where the transaction system is falling apart in the last 5 to 10 percent. However, the new changes in the system would be fully functional by the third quarter of 2019 and it is supposed to cover both domestic and international payment scenarios. JPMorgan officials are hopeful that their efforts would bear fruit especially regarding their international payments where things often went wrong.
A sandbox or a testing environment is also being set up for FinTech companies so that they could test the applications and develop them further. The sandbox is supposed to go live in the third quarter as well and will help developers to check out the building blocks such as file transfer, data modeling and messaging, and will help them judge how secure the whole infrastructure is. This arrangement is supposed to remove all hassles for developers regarding the environment, tooling and ecosystem and make matters more comfortable for them.
Although the IIN is currently free of charges, there are plans to make the services in commercial applications paid and this will also allow financial institutions to only select the services they would like to pay for.
Mr. John Hunter also predicts that as banks repeat most of their infrastructure in various scenarios, they are likely to deploy a utility service in the network itself. Experts have also predicted that the network’s long term ownership would be determined depending on how well it rolls out and it would need to be an ecosystem that would be supportive of the industry in order to succeed.