JP Morgan’s IIN aims to speed up cross-border payments and prove blockchain’s reliability and versatility.
Irish bank AIB is among a number of European banks working on the largest global application of blockchain, the distributed ledger tech underpinning cryptocurrencies.
A total of 76 banks from all over the world, including Société Générale and Santander, are joining the Interbank Information Network (IIN) that JP Morgan, Royal Bank of Canada and ANZ have been trialling over the past year.
The focus of the trial is to see if blockchain leads to greater efficiencies, especially in processing cross-border payments with fewer steps. In particular, by using blockchain technology, IIN aims to reduce the time banks currently spend responding to compliance and other data-related inquiries that delay payments.
Exploring the potential of blockchain
Blockchain presents a tantalising opportunity for banks to reduce costs, gain efficiencies and, crucially, bring legacy systems up to date without making enormous IT investments.
The technology consists of blocks that hold time-stamped batches of recent valid transactions, which form a chain, with each block reinforcing those preceding it.
Another Irish bank, Bank of Ireland, took part in a blockchain trial with Deloitte two years ago to prove that blockchain technology could be used as a way of tracing transactions in keeping with MiFID II regulations.
It is understood that JP Morgan built the information-sharing programme on its own proprietary blockchain platform, Quorum, and has been testing it with a handful of lenders since October 2017.
“We’ve been actively exploring how emerging technologies such as blockchain, AI and an enhanced digital experience can be deployed in our treasury services business to better serve our clients’ ever-changing needs,” said Takis Georgakopoulos, global head of treasury services at JP Morgan.
“We will lead the market with the roll-out of a robust pipeline of innovations over the coming months, beginning with the launch of IIN.” The expanded network of banks will facilitate global cross-border payments in every major market, including Latin America, Asia, Europe, the Middle East and Africa.
Emma Loftus, head of global payments and receivables for treasury services at JP Morgan, said: “We saw tremendous interest among correspondent banks after the pilot launched in 2017, asking if they could join.
“We believe IIN will significantly improve the efficiency of cross-border payments, particularly as more banks participate and we evolve the functionality and use cases beyond compliance-related inquiries.”