Banks have a 'big appetite' to join JPMorgan's blockchain party
- During JPMorgan's investor day, CFO Marianne Lake said the company's blockchain initiative - the Interbank Information Network - was working.
- Lake said other banks are looking to "join the party."
JPMorgan and crypto are a pair many might equate to oil and water.
The Wall Street giant's CEO - Jamie Dimon - famously called bitcoin a "fraud." And in a big regulatory filing the bank noted it could one day be disrupted by cryptocurrencies.
But the bank has been running a pilot program to make certain payments faster using cryptocurrency technology. And other banks are looking to get in on the action.
The Wall Street juggernaut launched its so-called Interbank Information Network (IIN) in October 2017 and the firm's chief financial officer Marianne Lake says the initiative is working. The platform, which is built on top of the bank's private Quorom blockchain, allows JPMorgan to exchange information with other banks to address compliance issues in certain cross-border payments, Lake said during the bank's investor day on Tuesday. The pilot involves JPMorgan, Royal Bank of Canada and Australia and New Zealand Banking Group, but Lake said that other banks are looking to "join the party."
That's not totally surprising considering how difficult cross-border payments can be. The time and expense of such payments is one of the things bitcoin seeks to remedy. A bitcoin holder can send or receive a coin in a matter of minutes, when the network isn't super clogged up.
"One of the most costly and time-consuming elements of executing cross-border payments today is in correspondent banks having to research and respond to compliance inquiries of each other," Lake said "Today, payments that are flagged for compliance reasons can be delayed for up to two weeks, but this technology can reduce that to minutes."
John-Paul Thorbjorsen, the head of crypto company Canya, told Business Insider the pilot shows JPMorgan has "figured out how to make an entry in the space."
Lake said the IIN is the first of many initiatives the bank will spearhead in payments.
"The Interbank Information Network represents the first step in our ability to improve end-to-end wholesale payments," Lake said.
JPMorgan isn't the only bank testing the water with blockchain technology. Barclays, UBS, and Credit Suisse are among the banks that participated in a pilot using Ethereum's blockchain to prepare for Markets in Financial Instruments Directive (MIFID II), a sweeping regulatory overhaul in Europe that went live this year.